OFFICE OF THE AUDITOR GENERAL
ANNUAL REPORT OF THE AUDITOR GENERAL FOR THE YEAR ENDED 30 JUNE 2007
VOLUME 2
CENTRAL GOVERNMENT
TABLE OF CONTENTS
INTRODUCTION ...... 1
GENERAL OBSERVATIONS ...... 5
REPORT OF THE AUDITOR GENERAL ON GOVERNMENT OF UGANDA CONSOLIDATED FINANCIAL STATEMENTS ...... 29
OFFICE OF THE PRESIDENT ...... 42
STATE HOUSE ...... 44
OFFICE OF THE PRIME MINISTER ...... 47
PUBLIC SERVICE ...... 57
FOREIGN AFFAIRS ...... 59
JUSTICE AND CONSTITUTIONAL AFFAIRS ...... 66
FINANCE, PLANNING AND ECONOMIC DEVELOPMENT ...... 71
AGRICULTURE, ANIMAL INDUSTRY AND FISHERIES ...... 77
LANDS, HOUSING AND URBAN DEVELOPMENT ...... 93
WATER AND ENVIRONMENT ...... 101
EDUCATION AND SPORTS ...... 119
HEALTH 140
WORKS AND TRANSPORT ...... 152
DEFENCE …………………...... 168
INTERNAL AFFAIRS ...... 175
INFORMATION AND COMMUNICATION TECHNOLOGY ...... 181
LOCAL GOVERNMENT ...... 184
TOURISM, TRADE AND INDUSTRY ...... 185
ENERGY AND MINERAL DEVELOPMENT ...... 188
GENDER, LABOUR AND SOCIAL DEVELOPMENT ...... 197 ii UGANDA POLICE ...... 203
UGANDA PRISONS ...... 211
NATIONAL AGRICULTURAL RESEARCH ORGANISATION (NARO) ...... 219
NATIONAL AGRICULTURAL ADVISORY SERVICES (NAADS) ...... 224
JUDICIARY …………………………………………………………………………… 247
DIRECTORATE OF PUBLIC PROSECUTION (DPP) ...... 251
PARLIAMENTARY COMMISSION ...... 253
HEALTH SERVICE COMMISSION ...... 254
JUDICIAL SERVICE COMMISSION ...... 254
ELECTORAL COMMISSION ...... 256
UGANDA HUMAN RIGHTS COMMISSION ...... 259
PUBLIC SERVICE COMMISSION ...... 261
LAW REFORM COMMISSION ...... 261
EDUCATION SERVICE COMMISSION ...... 262
LOCAL GOVERNMENT FINANCE COMMISSION ...... 262
UGANDA BLOOD TRANSFUSION SERVICES ...... 263
UGANDA LAND COMMISSION ...... 264
UGANDA INDUSTRIAL RESEARCH INSTITUTE ...... 270
UGANDA AIDS COMMISSION ...... 274
MAKERERE UNIVERSITY ...... 277
MBARARA UNIVERSITY ...... 301
KYAMBOGO UNIVERSITY ...... 305
GULU UNIVERSITY ...... 311
MAKERERE UNIVERSITY BUSINESS SCHOOL ...... 316
MULAGO HOSPITAL ...... 318
BUTABIKA HOSPITAL ...... 328
iii ARUA HOSPITAL ...... 331
GULU HOSPITAL ...... 342
JINJA HOSPITAL ...... 343
LIRA HOSPITAL ...... 350
MASAKA HOSPITAL ...... 351
FORT PORTAL HOSPITAL ...... 355
KABALE HOSPITAL ...... 359
HOIMA HOSPITAL ...... 362
SOROTI HOSPITAL ...... 366
MBARARA HOSPITAL ...... 367
LONDON MISSION ...... 370
NEW YORK MISSION ...... 378
WASHINGTON MISSION ...... 387
NEW DELHI MISSION ...... 392
CAIRO MISSION ...... 395
ADDIS ABABA MISSION ...... 399
BEIJING MISSION ...... 409
OTTAWA MISSION ...... 411
TOKYO MISSION ...... 413
TRIPOLI MISSION ...... 416
RIYADH MISSION ...... 420
COPENHAGEN MISSION ...... 420
NAIROBI MISSION ...... 424
DAR ES SALAAM MISSION ...... 428
ABUJA MISSION ...... 431
BRUSSELS MISSION ...... 434
iv ROME MISSION ...... 442
JUBA MISSION ...... 447
KINSHASA MISSION ...... 449
GENEVA MISSION ...... 452
PRETORIA MISSION ...... 459
KHARTOUM MISSION ...... 463
KIGALI MISSION ...... 464
MOSCOW MISSION ...... 470
BERLIN MISSION ...... 477
PARIS MISSION ...... 479
TEHRAN MISSION ...... 483
CANBERRA MISSION ...... 485
APPENDIX
CONSOLIDATED FINANCIAL STATEMENTS OF THE REPUBLIC OF UGANDA
v 1.0 INTRODUCTION I am required by Article 163 (3) of the Constitution of the Republic of Uganda to audit and report on the Public Accounts of Uganda and of all public offices including the courts, central and local government administrations, Universities and public institutions of like nature and any public corporations or other bodies established by Act of Parliament.
Under Article 163 (4) of the Constitution I am also required to submit to Parliament 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.
This is Volume two of my Annual Report to Parliament and it covers financial audits carried out on Central Government Ministries, Agencies, Universities, Uganda Missions abroad and Referral Hospitals. Separate volumes have been issued on the Annual Performance of the Office of the Auditor General, audit of Local Governments, and audit of Statutory Corporations.
In this introduction I give an overview of the financial audit work carried out, status of completion of the audits and a summary of the audit opinions issued on the financial statements of the entities audited.
Part II of this report presents the major general observations and cross cutting issues arising from the results of the audits carried out.
In Part III, I present my findings and audit opinion on Government of Uganda Consolidated Financial statements and all the significant findings made on the other audited entities i.e Ministries, Agencies, Universities, Referral Hospitals, and Uganda Missions abroad.
1 1.1 STATUS OF COMPLETION OF AUDITS The Directorate of Central Government is responsible for the audit of 20 Ministries, 19 Agencies, Commissions, Departments, 12 Referral Hospitals, 28 Uganda Missions abroad, 6 Public Universities, Uganda Revenue Authority and the Consolidated Government of Uganda Financial Statements. All the entities financial statements for year ending 30th June 2007 were audited and audit reports issued separately on each of them. The status of completion of the audits is indicated in the table below;
The status of audit is as indicated below:- Total Number Accounts Audits Of Accounts Audited Outstanding Ministries 20 20 - Agencies, Commissions, 19 19 - Departments Referral Hospitals 12 12 -
Missions 28 28 - (Embassies) Public Universities 6 6 - Uganda Revenue Authority 1 1 - GOU Consolidated Financial 1 1 - Statements Total 88 88 -
Of the total number of entities audited, 26 entities had unqualified opinions, 60 qualified opinions and 2 had disclaimer of opinion.
The table below provides a breakdown of the types of opinions issued. The basis used to arrive at the audit opinion is described in the separate reports issued on individual Ministries, Agencies, Referral Hospitals and Public Universities.
2 Unqualified Opinion 1 Local government 15 Internal Affairs 2 UMI 16 Masaka Hospital 3 Local Government Finance 17 IGG Commission 4 Soroti Reform Hospital 18 Lira Hospital 5 Arua Hospital 19 Police 6 Kabale Hospital 20 Law Reform Commission 7 Hoima Hospital 21 DPP 8 Gulu Hospital 22 Uganda Blood Transmission Service 9 Presidents’ office 23 Mbarara Hospital 10 Education Service 24 Tourism, Trade & Industry Commission 11 Health Service 25 Judicial Service Commission Commission 12 Public Service Commission 26 Uganda Industrial Research Institute 13 MUBS 14 Mbarara University
Qualified Opinion 1 Uganda Aids Commission 31 Rome Mission 2 Jinja Hospital 32 Beijing Mission 3 Parliament 33 Copenhagen Mission 4 NARO 34 Kigali Mission 5 Works & Transport 35 Brussels Mission 6 Justice 36 London Mission 7 Uganda Human Rights 37 Dar-Es-salaam Mission Comm. 8 Mulago Hospital 38 Paris Mission 9 Foreign Affairs 39 Addis – Ababa Mission 10 Agriculture, Animal 40 Washington Mission Industries & Fisheries 11 Butabika Hospital 41 Tripoli Mission 12 Education & Sports 42 New York Mission 13 Tokyo Mission 43 Ottawa Mission 14 Kyambogo University 44 New Delhi Mission 15 Gender, Labour & Social 45 Riyadh Mission Development 16 Lands & Housing 46 Berlin Mission 17 Prisons Department 47 Geneva Mission 18 Office of the Prime Minister 48 Pretoria Mission 19 Water & Environment 49 Abuja Mission 20 Mbale Hospital 50 Cairo Mission 21 Defence 51 Fort Portal Hospital 3 22 Finance, Planning & 52 Moscow Mission Economic Development 23 Electoral Commission 53 Nairobi Mission 24 Energy & Mineral 54 State House Development 25 Uganda Land Commission 55 Makerere University 26 Public Service 56 Uganda Revenue Authority 27 Judiciary 57 Information & Communication Technology 28 Health 58 Juba Mission 29 Tehran Mission 59 Canberra Mission 30 Khartoum Mission 60 GOU Consolidated Financial Statements
Disclaimer 1 Gulu University 2 Kinshasa Mission
4 PART II
2.0 GENERAL OBSERVATIONS
2.1 TAX APPEAL TRIBUNAL
The Tax Appeals Tribunal is mandated to hear and rule on cases pertaining to tax complaints brought forward by tax payers and/or URA before further adjudication by a higher court in case of appeal by either litigant. The expeditious rulings would ultimately result into efficient and better collection of taxes. However, by the date of issue of this report a dispute had arisen between the two bodies that is likely to adversely affect the functioning of the two bodies.
Uganda Revenue Authority has lodged a complaint with the Ministry of Finance expressing dissatisfaction with the performance of the Tax Appeals Tribunal particularly in regard to the manner they have handled the various cases brought against Uganda Revenue Authority. Other matters relate to the mandate, composition and competence of the Tax Appeals Tribunal members and the inconsistencies in rulings made by the Tribunal. On the other hand the Tax Appeals Tribunal disputes the Uganda Revenue Authority complaints. These differences have the effect of constraining the performance of URA in their role of tax collection and administration.
There is need for an urgent intervention by the Ministry to resolve the differences so that the two bodies can continue to carry out their functions effectively.
2.2 BUDGETS FOR STATUTORY BODIES Treasury came up with major reforms which saw the introduction of a very comprehensive chart of accounts that would enhance budgeting and reporting processes. However it has been observed that when making budgets, it is only Ministries, Agencies and Universities where the chart of 5 accounts is comprehensively used. When it comes to Statutory Bodies’ recurrent expenditure, all expenditure is itemized under one item 263106 (other current grants). I was not able to ascertain why these budgets are not further broken down to the anticipated actual expenditure items to enhance better budgeting.
The law also requires that all budgets for statutory bodies be presented to H.E. The President for his comments and submission to Parliament for consideration and approval. In Parliament these budgets are discussed by budget committees. The report of the budget committees forms a basis for Parliamentary appropriation.
However, a review of the Parliamentary resolution for approval of budgets for statutory bodies revealed differences in the budgets amounts approved by Parliament and those captured in the overall Government approved budgets. A case in point is the Parliamentary Commission which always has lower amounts captured in the approved Government of Uganda budget than what Parliament actually approves. This has the effect of giving rise to the need for supplementary appropriation to make up for the short falls in approved funding. However, any additional funding by way of supplementary appropriation would imply having the additional funding appropriated twice. This is considered irregular.
The Accountant General promised to follow up this matter with his counterparts in the budget directorate. I am yet to be informed of the outcome of this follow up.
2.3 DELAYS IN SUBMISSION OF FINANCIAL STATEMENTS Section 31(a) of the Public Finance and Accountability Act 2003, requires Accounting officers to prepare and submit financial statements for their Ministries/Agencies to the Office of the Auditor General for audit within three months after the year end (by 30th September).
6
Generally there has been an improvement in timely submission by the Missions and referral hospitals. However more Ministries/Departments and Universities have failed to meet the deadline compared to the previous year. This is attributed to laxity by Accounting Officers to have the accounts prepared on time.
The following Ministries/Agencies did not submit their financial statements on time as required and this directly impacted on my operations.
Ministry/Department Date Received 1. State House 4/12/2007 2. Office of the Prime Minister 18/11/2007 3. Water and Environment 26/11/2007 4. Ministry of Health 4/12/2007 5. Parliament 4/12/2007 6. Works and Transport 13/11/2007 7. Mulago Hospital 26/11/2007 8. Tourism, Trade and Industry 7/01/2008 9. Gender, Labour and Social Dev. 4/12/2007 10. Uganda Police 5/11/2007 11. Health Service Commission 13/11/2007 12. Inspectorate of Government 4/12/2007 13. Education Service Commission 4/12/2007 14. Judicial Service Commission 4/12/2007 15. Director of Public Prosecution 1/11/2007 16. Local Govt. Finance Commission 4/12/2007 17. Uganda Aids Commission 4/12/2007 18. Uganda Blood Transfusion 12/11/2007 19. Treasury 1/11/2007
7 Referral Hospitals 1. Gulu Hospital 3/12/2007 2. Masaka Hospital 26/11/2007 3. Fort Portal Hospital 3/12/2007 Missions 1. Juba 1/12/2007 2. Canberra 11/12/2007 3. Nairobi 4/12/07 4. Tehran 3/1/08 5. Cairo 3/1/08 6. Khartoum 3/1/08 7. Pretoria 21/12/07 8. Kigali 3/1/08 9. Paris 3/1/08 10. Dar-es-Salaam 18/01/2008 UNIVERSITIES 1. Mbarara University 12/11/2007 2. Kyambogo University 16/11/2007 3. Makerere University Business School 4/12/2007
2.4 TERTIARY INSTITUTIONS All tertiary institutions are governed by the Universities and Other Tertiary Institutions Act, 2001. The Act establishes them as financially and administratively autonomous institutions and requires them to maintain and produce annual financial statements which should be audited by the Auditor General.
The list from the ministry of Education and Sports puts the number of Tertiary Institutions to over two hundred (200). However, very few of these prepare the required annual financial statements. The few that try to
8 prepare financial statements do not follow a standardised financial reporting framework.
I have advised the Ministry of Education to put in place measures for the enforcement of preparation of financial statements and also liaise with the Accountant General for the development of a suitable standardised financial reporting framework for all the tertiary institutions.
2.5 AUDIT OF EXPENDITURE ON COMMONWEALTH HEADS OF GOVERNMENT MEETING (CHOGM)
The Commonwealth Heads of Government Meeting (CHOGM) is a Summit meeting held every two years by the Heads of Government from all the Commonwealth nations. Most meetings over the years have included the appearance of Her Majesty the Queen of Great Britain who is the titular Head of the Commonwealth.
The Summit provides a unique forum for consultations and discussions on global and Commonwealth issues and an opportunity to agree on collective policies and initiatives. In November 2007, Uganda had the honour of hosting this summit whose theme for the meeting was “Transforming Commonwealth Societies to Achieve Political, Economic and Human Development”.
As the Host Government, Uganda was obligated to put in place facilities that would meet the requirements of the Commonwealth Secretariat. The Ministry of Foreign Affairs was the overall co-ordinator of all the CHOGM activities. Due to the wide span of the activities involved, it was decided that some of those activities be delegated and managed by Permanent Secretaries of the various committees that were established.
A total of Shs.255 billion was released for the preparation of the CHOGM activities during the financial years 2005/06 to 2007/08, of which the bulk 9 of this expenditure was released during 2007/08 to the Accounting Officers who were responsible for its propriety.
In December 2007 the Government through Cabinet requested my Office to undertake a financial and value for money audit to confirm whether this responsibility entrusted to the Accounting Officers was indeed executed and performed with due regard to the authorities that govern that public expenditure.
The special audit was undertaken and it focused on the financial aspects of that expenditure, to obtain reasonable assurance on whether those funds were properly budgeted, requisitioned and utilized for the intended purposes. In addition, a further special audit was also commissioned to establish whether funds released on civil works and infrastructure were spent taking into consideration the principles of economy, efficiency and effectiveness (value for money). The financial audit has been completed and the detailed audit findings have been issued to the Executive and to the Speaker.
The additional VFM audit of the civil works expenditure is in its final stages of completion.
Generally there were many challenges to hosting an event of such magnitude in terms of operations, management and accountability but generally the CHOGM event presented Uganda with many opportunities and experiences to benefit from, which accrued to both the private and Public sector ranging from improved and faster communications facilities to expanded hospitality/ tourism amenities. Instances of non compliance with laws and regulations resulting in unaccounted for funds, loss and abuse of public resources were noted in the audit report, and it is of essence that the authorities bring pressure to bear on the responsible officials to provide
10 the requisite accountability or be surcharged as provided for in the Public Finance and Accountability Act.
2.6 DOMESTIC ARREARS: (a) Domestic Arrears:- Consolidated domestic arrears as at 30th June, 2007 for Ministries, Referral Hospitals, Departments and Foreign Missions stood at Shs.210,623,171,766 compared to Shs.279,181,303,353 as at 30th June, 2006. Arrears for Public Universities and Uganda Management Institute amounted to Shs.32,614,404,949 as at 30th June 2007.
Although the arrears management strategy being implemented by the Treasury has led to improvements in the management of arrears, Accounting Officers still need to further comply with the commitment control system and desist from continually incurring domestic arrears. Government should also endeavour to settle the existing stock of domestic arrears in order to portray a positive image in its management of the budget and to avoid litigation and unplanned impacts on the economy. Details by Vote are as follows:-
NAME OF MINISTRY/DEPARTMENT/HOSPITAL/MISSION AMOUNT Ministry of Finance, Planning and Economic 23,945,104,070 Development Ministry of Defence 43,978,799,833 Ministry of Foreign Affairs 24,859,666,378 Ministry of Justice and Constitutional Affairs 3,512,717,895 State House 4,488,339,468 Ministry of Works, Housing and Communications 7,138,979,930 Ministry of lands 9,071,183,529 Electoral Commission 5,729,311,229 Ministry of Water and Environment 11,396,099,000
11 Ministry of Communication and ICT 197,795,376 Ministry of Agriculture, Animal and Industry 9,466,469,142 Uganda Police 4,942,826,959 Ministry of Tourism, Trade and Industry 7,902,942,430 Ministry of Gender, Labour and Social Development 4,968,807,747 Ministry of Energy and Minerals 4,867,560,174 Office of the Auditor general 36,567,512 Uganda Prisons 5,413,996,398 National Agricultural and Research Organisation (NARO) 2,284,567,687 Ministry of Health 2,959,836,104 Ministry of Education and Sports 4,349,495,936 Office of the President 5,795,796,452 Ministry of local government 2,140,104 Judiciary Department 5,686,766,752 Directorate of Public Prosecutions 231,232,095 Office of the Prime Minister 901,533,958 Ministry of Public Service 346,666,533 Uganda Human Rights Commission 1,934,592,630 Public Service Commission 79,889,269 Inspectorate of Government 1,544,004,360 National Environment Management Authority(NEMA) 209,246,217 Uganda lands Commission 648,865,014 External security Organisation 1,198,000,000 Local government Finance Commission 936,816 Judicial Service Commission 25,598,319 Health Service Commission 19,317,377 Ministry of Internal Affairs 1,929,658,675 Uganda Aids Commission 115,113,962 Sub-Total 202,180,425,330
Mulago Hospital 2,969,363,421 Butabika Hospital 3,000
12 Jinja Hospital 249,997,135 Mbale Hospital 230,000,433 Soroti Hospital 616,155,410 Gulu Hospital 32,572,760 Masaka Hospital 36,185,455 Fort Portal Hospital 79,902,087 Lira Hospital 75,398,594 Hoima Hospital 17,626,208 Kabale Hospital 31,924,727 Mbarara Hospital 119,580,780 Arua Hospital 21,743,597 Sub-Total 4,480,453,607
Uganda Embassy in Italy 1,249,515,265 Uganda Mission in New York 1,267,084,856 Uganda Embassy in Ethiopia 13,644,161 Uganda High Commission in Tanzania 210,318,967 Uganda Embassy in China 136,281,089 Uganda High Commission in Kenya 210,935,207 Uganda Embassy in Rwanda 42,075,618 Uganda High Commission in Canada 126,460,542 Uganda High Commission in India 10,438,019 Uganda Embassy in Saudi Arabia (Riyadh) 55,123,070 Uganda Embassy in Belgium 399,904,917 Uganda Embassy in Berlin 61,722,019 Uganda Embassy in The US 122,597,214 Uganda High Commission in Nigeria 56,191,885 Sub-Total 3,962,292,829
TOTAL Ministries, Hospitals, 210,623,171,766 Missions/Departments Makerere University 26,530,920,895
13 Kyambogo University 2,666,271,188 Makerere University Business School 910,622,283 Uganda Management Institute 874,347,940 Gulu University 889,745,671 Mbarara University 742,496,972 Sub-Total 32,614,404,949
GRAND-TOTAL 243,237,576,715 b) Pension Liabilities:
As at 30th June 2007 pension liabilities amounted to Shs.210,840,827,822 compared to Shs.222,825,029,112 as at 30th June 2006. This does not take into account the pending liability of over Shs.One trillion arising from a court judgement in favour of the former soldiers of the Uganda Defence Forces (military).
The table below gives a breakdown of the pension arrears as at 30th June, 2006.
Pension Liabilities
CONSOLIDATED 30 June 2007 30 June 2006 Office of the President (Gratuities) 15,014,111,038 15,238,186 Ministry of Public Service including Military Widows and Survivors Benefits 190,841,680,614 222,340,243,548 Uganda High Commission UK (Gratuities) 555,158,170 469,547,378 0 ESO 4,429,878,000 Total 210,840,827,822 222,825,029,112
14 c) Contingent Liabilities
A total of Shs.384,724,059,917 was reported as contingent liabilities as at 30th June, 2006. The bulk of it relates to unverified pension liabilities for the Ministry of Defence (Shs.107 billion) which have stood in the accounts of Ministry of Public Service unresolved for over three years. It also includes Shs.198,533,965,000 relating to guarantees and indemnities under Ministry of Finance. I have advised the Accounting Officers to have the contingent liabilities investigated and verified. Efforts should also be made to have those relating to legal proceedings concluded. The table below gives a breakdown of the contingent liabilities position:-
Ministry/Department Total Contingent Total Contingent Liabilities Liabilities (30th June 2007) (30th June 2006) Shs. Shs. State House 5,326,850,455 6,150,760,859 Office of the Prime 566,364,157 566,364,157 Minister Ministry of Defence 18,000,000 Ministry of Public 107,000,000,000 107,000,000,000 Service Ministry of Foreign 89,401,439 Affairs Ministry of Justice 73,207,478,866 73,207,478,866 Ministry of Finance 198,5333,965,000 Ministry of Internal 20,001,230,409 Affairs Total 384,724,059,917 207,951,572,245
15 2.7 OUTSTANDING ADVANCES During the year under review advances totalling to Shs.10,721,944,304 remained unaccounted for contrary to financial regulations which require all advances to be retired at the year end.
Delays in accounting for advances are caused by laxity by Accounting Officers to enforce timely accountability and strengthen controls over advances. Such delays may lead to falsification of accountability.
In the absence of the requisite accountability, I was not able to confirm that funds were utilized for the intended activities.
These advances are detailed in the individual reports and accounts of the entities and are summarized here under:-
SCHEDULE OF UN-ACCOUNTED FOR ADVANCES 2006/2007
S/No. Ministry/Department Amounts (Shs) 1. State House 8,886,400 2. Office of the Prime Minister 235,384,775 3. Finance, Planning And Economic Dev. 2,175,583,993 4. Agriculture, Animal, Industry and 366,308,000 Fisheries 5. Water and Environment 13,734,000 6. Education and Sports 372,512,324 7. Health 774,027,753 8. Parliament 3,190,000,000 9. Defence 1,287,140,000 10. Mulago Hospital 456,668,007 11. Local Government 43,158,940 12. Tourism, Trade And Industry 10,887,750
16 13. Gender, Labour and Social Development 23,698,000 14. National Agriculture Research 31,540,200 Organization 15. Judiciary 10,608,412 16. Electoral Commission 329,815,000 17. Uganda Human Rights Commission 8,000,000 19. Makerere University 786,741,083 20. Mbarara University 39,654,440 21. Kyambogo University 429,563,516 22. London Mission 3,469,000 23. Addis Abbaba Mission 15,307,011 24. Tokyo Mission 106,535,700 25. Uganda Industrial Research Institute 2,720,000 10,721,944,304
2.8 EXCESS EXPENDITURE A number of votes incurred expenditure which exceeded their approved budgetary provisions as indicated in the table below. Excess expenditure is a result of improper budgeting and weaknesses in controls over budgetary expenditure. For the Uganda Embassies, the major cause is unauthorised utilisation of non-tax revenue at source. Accounting Officers have been advised to have this expenditure properly regularised in accordance with the regulations.
Name of Ministry Approved/Revised Actual overexpenditue Expenditure UGANDA AIDS COMMISSION 7,064,064,000 7,639,431,865 (575,367,865) NATIONAL PLANNING AUTHORITY 11,511,960,000 11,753,328,177 (241,368,177) NATIONAL AGRICULTURAL & RESEARCH ORG. 25,665,951,000 31,346,217,220 (5,680,266,220) UGANDA BURREAU OF STATISTICS 7,626,672,000 11,791,457,739 (6,579,715,739) PRISONS 38,487,681,695 (4,264,785,739) 17 32,874,305,000 UGANDA MISSION AT THE UN, NEW YORK 2,022,498,149 3,941,343,319 (1,918,845,170) UGANDAHIGH COMMISSION IN CANADA 1,452,742,000 1,480,106,153 (27,364,153) UGANDA HIGH COMMISSION IN KENYA 910,954,000 1,302,821,639 (391,867,639) UGANDA EMBASSY IN THE US 1,493,579,000 1,614,441,401 (120,862,401) UGANDA EMBASSY IN CHINA 1,152,498,000 1,300,832,145 (148,334,145) UGANDA EMBASSY IN JAPAN 1,392,280,000 1,401,099,752 (8,819,752) UGANDA EMBASSY IN SAUDI ARABIA 757,109,000 771,323,965 (14,214,965) UGANDA EMBASSY IN DENMARK 1,358,100,496 1,409,454,337 (51,353,841) UGANDA EMBASSY IN BELGIUM 1,406,598,000 1,566,010,151 (159,412,151) UGANDA EMBASSY IN ITALY 1,935,788,000 2,094,811,524 (159,023,524) UGANDA EMBASSY IN SUDAN-Khartoum 785,000,000 790,145,040 (5,145,040) UGANDA EMBASSY IN PARIS 1,584,523,000 1,706,825,553 (122,302,553) UGANDA EMBASSY IN MOSCOW 509,121,000 616,827,879 (107,706,879) UGANDA EMBASSY IN CANBERRA 698,510,000 775,382,813 (76,872,813)
MINISTRY OF 1,492,589,124 (280,533,124) COMMUNICATION & ICT 1,212,056,000
2.9 BOARD OF SURVEY (BOS) The Public Finance and Accountability Regulations require that the Secretary to the Treasury and the Accountant General to appoint a Board of Survey for each Ministry, department and agency of government to survey cash, bank balances and stores held by Accounting Officers at the end of each financial year. All the votes submitted Board of Survey reports apart from the Uganda embassies of Goma and Kinshasa.
18 In the consolidated reports prepared by the Accountant General on the findings from the Board of Survey on stores undertaken for the period ended 30.06.2007, several government stores and assets were found obsolete, unserviceable or too old for their purpose and were hence recommended for boarding-off. Included are 201 motor vehicles of which 57 are for NARO, 31 for Ministry of Health, 16 for Mulago, 16 Foreign Affairs.
However, it was noted during the audit that in many instances government stores and assets recommended for board off were being held or grounded for too long hence eroding any salvage value realizable at the time of disposal. There is loss of income to government notwithstanding, keeping large volumes of scrap stores/assets creates competition for space, pilferage, environmental hazards (e.g. expired laboratory chemicals identified at Kyambogo University). It is recommended that unusable stores/assets be timely identified and disposed off expeditiously in a manner that is beneficial to government.
It was also noted that in a number of instances the boards appointed do not carry out a comprehensive job. The information reported by these boards is some times inconsistent with that reported in the financial statements and other records of the Ministries. A number of Ministries and departments had stores for board off which were never captured in the Board of Survey reports. This was particularly evident in the Ministries of Defence, Police, State House, Agriculture, Lands, Education and Prisons.
Accounting Officers have been advised to expedite the implementation of the Board of Survey recommendations particularly those regarding items for boarding off or disposal. There is also need for more guidance, training and supervision of all surveys that are undertaken out so that they produce accurate and useful information.
19 2.10 LOSSES During the year losses of cash and stores valued at shs.327,435,008 were reported by various ministries, departments and institutions as indicated below:-
These losses should be investigated and properly dealt with in accordance with the Public Finance and Accountability Act 2003 and the attendant regulations.
Schedule of Losses Value (Shs) Nature of 2006/2007 Loss
S/No. Ministry/Department 1. Justice 9,581,500 Sundries office equipments 2. Internal Affairs 37,210,000 Passports 3. Education and Sports 12,115,500 Gestener cycle styling machine 4. Works, Housing and 40,400,000 TV,VCR, to curtains and Communications Equipments 5. Butabika Hospital 8,035,416 Document safe 6. Uganda Police 175,500,000 Cash 7. National Agriculture Research 36,153,800 M/cycle and computers(2) Organization 8. Electoral Commission 2,424,000 Office Equipments 9. Inspector General of 5,636,592 Government 10. Tokyo Mission 378,200 DVD/VCR Player 327,435,008
20 2.11 MISSIONS (i) Management of Mission Properties During the year the Ministry of Foreign Affairs initiated the process of formulating a policy and strategy on the management of Uganda properties abroad. Consultations were held with various stakeholders including Parliament. The intention was to put in place a policy framework that would guide the acquisition, financing, maintenance, disposal and proper management of Uganda properties abroad.
This drive was in response to a policy communication from the Ministry of Finance to transfer the management of the Mission properties from Uganda Property Holdings (Ltd) to Ministry of Foreign Affairs.
Indications are that not much progress has been made. Consultations with various stakeholders to obtain their views and concurrence have not been concluded.
As a consequence Uganda Missions are still facing enormous challenges in the management of their properties. They still lack funds to renovate and maintain many of their dilapidated structures. The official residence for the Head of Mission, Brussels has remained inhabitable for almost 10 years despite its prime location in the city. Some Missions like have prime plots of land allocated to them for constructing Embassy buildings but these authorities are about to be withdrawn due to lack of funding for their development.
In a related development, some Missions have made proposals to dispose off some mission properties. The Uganda Mission in Washington made a proposal to the Ministry of Foreign Affairs for the sale/disposal of two of its properties despite the good state they are in. It is claimed that the intention is to acquire properties for the chancery and staff residences considered to be a better option. 21 I have advised the Head of Mission that in the absence of a clear policy, any sale or disposal of Mission properties would require wide consultations with all stakeholders including the Cabinet, relevant authorities and compliance with the law and a proper justification showing cost/benefit analysis to allow all stakeholders make informed decisions.
I recommend that government expedites the process of coming up with a clear policy on the management, sale, disposal and acquisition of Mission properties.
(ii) Land Titles Audit Inspections revealed that many of the Missions with buildings cannot trace their land titles. The titles for the properties owned by the Ugandan Missions in Washington, New York and Paris were not available at the station. The Ministry of Foreign Affairs are also not aware of the whereabouts of the land titles.
I have advised the Accounting Officers of the Missions to liaise with the relevant Ministries to trace the titles and keep copies at the Missions. Moreover it is negligent to not have proper custody of government property.
2.12 REGIONAL REFERRAL HOSPITALS All the referral hospitals were established more than 70 years ago as district hospitals and upgraded to serve as regional referral hospitals in mid 1990s. Currently they each serve a minimum of five districts with some like the case of Arua Hospital serving regions extending beyond the Ugandan border. In most cases, these hospitals have also continued to serve as district hospitals in the regions where they are located. Despite the large catchment areas and large population, the hospital infrastructure that were planned at the time these hospitals were constructed more than seventy
22 years ago, has not been expanded nor upgraded. This has greatly affected their operations. The following matters were generally noted during my audit and inspections of referral hospitals.
2.12.1Staff Establishment In many of the referral hospitals, the existing staffing structures are not adequate to address the current needs of the hospital. The staff establishments were set up more than ten years ago but have not been revised to match the ever increasing demand for medical services by the population. Hospitals now serve larger areas and their catchment population is above the planned numbers as a result of cross border movements. The increasing number of patients is also associated with poor referral system and poorly functioning health centres.
It was noted that in many regions Health Centre IVs are not functioning properly. Although they have adequate infrastructure they lack medical personnel. This has led to increased numbers of patients at referral hospitals. However the current establishment lists for many referral hospitals show that not all the approved posts are filled hence creating staffing gaps in key posts. Many of the referral hospitals had vacant posts for Doctors, radiographers, Pharmacists and specialists for gynaecology, surgery, pathology and anaesthesia. As a consequence the few available staff are over-worked and the patients end up not getting adequate attention/assessment time as the medical standards require. Understaffing in such key areas that are fundamental for effective and efficient delivery of the required services renders the referral system ineffective.
In my discussions with the Accounting Officer, they explained that although they have declared the vacant posts and submitted them to the Ministry of Health and the Health Service Commission and Public Service Commissions, the responses to recruit staff for the referral hospitals have been slow.
23 2.12.2Staff Accommodation The hospitals were greatly affected by the government policy to dispose off government pool houses. Some houses which used to serve as institutional houses accommodating hospital staff were also sold to the sitting tenants. This left the hospitals with few or no houses to accommodate staff. Where the hospitals have some houses, they are either not sufficient or not habitable due to the sorry state they are in, like in the case of Mbale hospital. It is also difficult to get decent accommodation near the hospitals for staff who are on night calls. Without decent accommodation it is very difficult to attract key medical personnel to work in upcountry referral hospitals.
The Accounting Officers explained that it has become difficult to retain staff because of lack of accommodation and yet the budget does not provide for housing allowances. There is need to provide suitable accommodation for medical officers working upcountry. Construction of institutional houses for the hospitals would be a step in the right direction.
2.12.3State of the Hospital Infrastructure (a) Buildings Most of these buildings are dilapidated having walls and ceiling crumbling and have not been renovated in the recent past. The Out Patients Department (OPDs) are housed in small, old buildings without adequate space for the big numbers of patients visiting the hospital daily. Most of the road/path network is also in poor state and this hinders mobility and movement within the hospitals difficult.
The hospitals have not had any expansion since they were turned into regional referral hospitals. The available infrastructure capacity has been out-paced by the increase in responsibility/number of patients and this has led to an accommodation crisis. This was evidenced from the over crowded
24 maternity wards, surgical and general wards which are accommodating more patients than they were designed for, in many instances resulting into floor cases and utilisation of corridors to accommodate more patients. This overcrowding leads to poor hygiene and may facilitate disease transmission.
(b) Inadequate Theatre Facilities The hospitals operate without adequate theatre facilities. In many hospitals, theatres are in dilapidated buildings, and lack proper functioning theatre equipment like operating tables, doctors’ chairs, adjustable lights, autoclaves, air conditioning facilities etc. Where equipment is available, it is too old to serve its purpose. The minor theatres in the Out Patients Departments where minor operations are carried out are also poorly equipped or out of service due to the sorry state they are in.
(c) Medical Waste Management Disposal of medical waste in various referral hospitals is by placenta pits which are considered to be a crude method of waste disposal. Disposal of other medical waste (used sundries) is by burning in open pits which is also considered not to be environmentally safe. Most of the hospitals do not have properly functioning incinerators. The incinerators constructed by the Ministry of Health at Masaka and Mbarara hospital cracked shortly after hand over and are not functional.
There are also inadequate mortuary facilities. Masaka hospital has none at all. Where mortuaries are, they appear very dilapidated and are housed in tiny structures and lack modern facilities.
An environmental audit carried out at the National Referral Hospital also revealed inadequate waste management and disposal practices. The issues noted included:
25 • Lack of medical waste policies and strategies. • Limited awareness and access to legislation and guidelines relating to waste management and disposal. • Lack of documented internal medical waste control systems. • Inadequate supervision and monitoring by the regulatory body. • Inadequate use and lack of protective gear. • Lack of adequate supply of disinfectants and disposal tools like waste bins. • Poorly arranged drugs stores.
A separate report was issued to management and the issues have also been summarised in the audit report of Mulago Hospital.
(e) Sewerage System and Sanitary Facilities The sewerage systems and sanitary facilities in the hospitals are as old as the hospital themselves. With time, the pipes became old and they now often break down. Generally the sewerage system cannot support the increasing hospital population any longer. The Accounting Officers explained that there is need to overhaul the entire system and even construct lagoons for proper waste management and disposal.
2.12.4Transport The Hospitals are operating with only a few old vehicles that have outlived their useful lives. Most of these vehicles are over ten years old and can hardly operate as they frequently break down. It is becoming uneconomical to maintain them. A number of the hospitals also lack ambulances.
The Accounting Officers explained that as referral hospitals, they need to operate with a minimum of two ambulances but most of them are operating with only one or none at all and that those that have they have
26 become very old to maintain. There is need to have the old vehicles and ambulances replaced to enable the hospital operate effectively.
2.12.5Shortage and Use of Faulty Equipment There is generally lack of modern equipment and this makes the working environment for medical personnel very difficult. Medical equipment is very old and some obsolete as most of it was acquired at the time the hospitals were constructed in the 1930’s. The storage facilities in the various offices are also too old and require immediate replacement. In some hospitals, autoclaves are non functional/faulty and instead charcoal stoves are used for sterilisation of equipment. The continuous shortage and use of faulty equipment leads to poor service delivery and puts the lives of both the medical staff and patients at a great risk.
2.12.6Lack of Capital Development Funds Although the hospitals are operating as individual votes, no capital development funds were allocated in their budgets. In the circumstances, no major developments could be initiated by the hospitals nor could they carry out any major repairs of their dilapidated structures, procure vehicles or any other equipment.
The recommendation by the Public Accounts Committee to have the hospital capital development vote decentralised at the hospital vote level has not yet been implemented by the Ministry of Health.
2.12.7Expired Drugs Many hospitals face a serious problem of expired drugs arising from drug procurements and donations that are not properly planned for. Ministry of Health through the National Medical Stores has a “push system” whereby drugs and sundries are simply pushed to user hospitals through donations without regard to their consumption needs and patterns. In the process hospitals are supplied with drugs which are either not needed at all or are in excess of their needs hence leading to their expiry.
27 The other cause of expired drugs is procurement of short shelf life drugs. Some Accounting Officers indicated that National Medical Stores (NMS) sometimes deliberately dumps drugs which are about to expire. For example, Arua hospital had a sizeable quantity of ARV drugs delivered which had expired two months earlier. At Mbale referral hospital National Medical Stores delivered Zinc Oxide which turned out to be non-adhesive. In Kabale hospital huge quantity of Aspirin and Panadol donated under the Global Fund were delivered when they had expired.
Expired drugs do not only pose a danger to personnel but are also costly to keep and also occupy space that would otherwise be utilised for other purposes. There is need for the Ministry of Health to come up with a stringent policy on drug donations. Donations should be properly screened before they are accepted. Procurement planning should also be strengthened such that only drugs with acceptable shelf life are purchased.
2.12.8Private Patients Scheme Many hospitals now operate private patients scheme which generate non- tax revenue. In accordance with NTR guidelines, all the revenue is remittable to the Consolidated Fund. In order for the scheme to operate efficiently and generate enough revenue, it has to be adequately equipped with the required medical drugs, equipment and well motivated staff. However, this is hampered by lack of adequate resources to finance their routine operations. A number of Medical Superintendents have expressed the wish for the hospitals to be allowed to use the NTR proceeds from the private patients scheme to finance their needs and further improve the scheme’s health service delivery standards.
I recommend that the Ministry considers this view for all referral hospitals since it has proved to be successful at Uganda’s major national referral hospital.
28 PART III
3.0 REPORT OF THE AUDITOR GENERAL ON GOVERNMENT OF UGANDA CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30TH JUNE 2007 TOGETHER WITH THE OPINION
I have audited the financial statements set out on pages 10 to 38 of the GOU Consolidated financial Statement. Under Article 164 of the Constitution and Section 8 of the Public Finance and Accountability Act 2003, the Accounting Officer is accountable to Parliament for the funds and resources of the Ministry. These financial statements are also under Section 31 of the same Act the responsibility of the Accountant General.
My responsibility as required by Article 163 of the Constitution, Section 33 of the Public Finance and Accountability Act, is to audit and express an opinion on these statements based on my audit.
PART A of my report sets out my opinion on the financial statements. Part B which forms an integral part of this report presents in detail all the significant audit findings made.
PART ‘A’
3.1 BASIS OF OPINION
I conducted my audit in accordance with International Standards on Auditing and Government of Uganda Legislation. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements as well as evidence supporting compliance with relevant laws and regulations. An audit also includes
29 assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion.
3.1.1 Cash and Cash Equivalents For the period ended 30th June 2007, government reported a consolidated Cash and Cash Equivalents balance of Shs.1,177,176,897,305 represented by cash and bank balances Shs.2,411,748,703,028 and bank overdrafts Shs.1,234,571,805,723. In the absence of comprehensive information on the overall stock of government bank accounts held both in the BOU and commercial banks, I was not able to confirm that the balance is properly stated.
3.1.2 Foreign Debt Included in government’s consolidated foreign debt portfolio are eleven (11) loans totalling Shs.35,193,062,617 without any supporting documentation such as loan agreements.
3.1.3 Finance Costs Finance costs in respect of interest on treasury Repo stocks/transactions amounting to Shs.15,774,825,032 accumulated over the years, including Shs.5,703,149,467 for the period under review were not recognized in the financial statements. This has the effect of understating the equity.
3.1.4 Government Bonds The variance of Shs.27,287,232,115 between Shs.184,370,732,115 representing matured treasury bonds that were redeemed and Shs.157,083,500,000/= charged in respect of the redemption on the Treasury Bond investment account was not explained to my satisfaction.
30 3.2 OPINION
In my opinion;
Except for the effects of any adjustments, if any, as might have been determined to be necessary had I been able to satisfy myself on the matters noted above.
• The financial statements fairly present in all material respects the financial position as at 30th June, 2007 and the results of its operations and cash flows for the year then ended, and comply in all material respects with Generally Accepted Accounting Practice and the Public Finance and Accountability Act, 2003.
• The expenditure and receipts have been applied in all material respects for the purposes intended by Parliament.
3.3 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.
3.3.1 Receivables (Outstanding Government Loans) Out of Shs.1,205,608,734,946 reported as outstanding government loans as at 30th June 2007, loans totalling to Shs.620,884,726,162 have not been performing for a very long time. The basis used for the provision made in this respect was not explained.
3.3.2 Unexplained Transactions on Holding Accounts Various entries relating to transaction reversals and revaluations on the budget support holding accounts were not explained. I was therefore not able to confirm the balances of the affected accounts.
31 3.3.3 Other matters are included in Part B of the report.
John F. S. Muwanga AUDITOR GENERAL
KAMPALA
30 APRIL 2008
PART “B” 32
DETAILED REPORT OF THE AUDITOR GENERAL This Section outlines the detailed audit findings, management response, and my recommendations in respect thereof.
3.4 Cash and Cash Equivalents
3.4.1 Cash Balances For the period ended 30.06.07, government reported a consolidated cash and bank balance of Shs.2,411,748,703,028 and bank overdrafts Shs.1,234,571,805,723 on all bank accounts operated by the Treasury and Central Government ministries. It includes balances with the Bank of Uganda for both the Consolidated Fund and for various votes and for all Project Accounts. There is no comprehensive information on the overall stock of government bank accounts held both in the BOU and commercial banks to enable me undertake audit procedures to confirm the completeness and accuracy of the balances reported.
Besides cash balances on donor funded project bank accounts particularly those still in commercial banks are not captured in accordance with the accounting policy followed on consolidation of Project expenditure.
The absence of a comprehensive data on bank accounts further makes it difficult to periodically circularize and reconcile government bank accounts and balances for authenticity, purpose, obsolescence/redundancy and excessive liquidity, and illegal overdraws.
3.4.2 Redundant and Overdrawn Accounts Bank records indicate that 153 bank accounts did not record any transactions for the whole financial year under review. One hundred and thirty three (133) of the accounts had redundant credit balances worth Shs.32,199,268,269 while twenty (20) were overdrawn to the tune of Shs.11,160,722,951. Government bank accounts in BOU have continued to
33 be overdrawn despite the instruction by Treasury to the Central Bank not to have overdrawn accounts
In his response, the Accountant General explained that ‘Treasury is in the process of revalidating all bank accounts held by all votes whether in commercial banks or BOU’. On twenty (20) accounts overdrawn to a tune of Shs.11,160,722,951 he stated that an explanation has been sought from the BOU for the anomaly. I still await the outcome of the revalidation exercise and the BOU comments on the overdrawn accounts.
3.5 Foreign Debt A review of the foreign debt portifolio has shown that government is in arrears on twenty one (21) loans that have been due for repayment. According to the DMFAS data base, total principal in respect of the 21 loans as at 30 June 2007 was Shs.202,300,014,509. For over 10 years, there has not been any movements in principal values either in terms of repayments, rescheduling or otherwise. It was explained that the decision not to pay the loans was based on the Paris Club agreement that requires all creditors to deliver HIPC initiative debt relief to countries under HIPC 1 &11.
Included in the 21 non-performing loans are 11 loans worth Shs.35,193,062,617 without any supporting documentation (e.g., loan agreements). The Accountant General explained that the loan agreements were lost when a consultancy contracted to validate the debts in 1991/92 failed to hand back the loan agreements and that efforts to trace the firm and the loan agreements have proved futile.
These loans need to be thoroughly investigated for their legitimacy in order to mitigate the risk of paying unscrupulous claims.
3.6 Receivables (Outstanding Government Loans) In my report to Parliament on the Public Accounts of the Republic of Uganda for the year ended 30th June, 2006, I reported that Government 34 loans totalling Shs.1,242,928,209,265 to state and private enterprises were still outstanding. As at 30.06.07 Shs.1,205,608,734,946 was outstanding as a number of enterprises had partially paid up while some debts were wholly or partially cancelled. It was noted that Loans worth shs.620,884,726,162 have not been performing for a very long time. Their recoverability is highly doubtful.
The basis for the provision made in the accounts in this respect was not properly explained.
3.7 Finance Costs Finance costs in respect of interest on treasury Repo stocks/transactions amounting to Shs.15,774,825,032 accumulated over the years, including Shs.5,703,149,467 for the period under review were never recognized or expensed in the accounts, accordingly overstating government equity. The Accountant General explained that he was hesitant to recognize the expenditure because he cannot measure it reliably since no database or records are maintained at the Treasury. He added that the liability was picked from the statement of Government position from Bank of Uganda and that consultations between his Office and BOU are going on to explore the possibility of having monthly returns upon which reconciliations will be carried out.
3.8 Treasury Bonds During the period under review Treasury Bonds worth Shs.184,370,732,115 matured and were accordingly redeemed. However, the debits on the Treasury Bond Investment Account in respect of these redemptions amounted to Shs.157,083,500,000 only. The variance of Shs.27,287,232,115 was not satisfactorily explained.
The Accountant General explained that the bonds figure presented in the accounts (Shs.184,370,732,115) fully reconciles with Bank of Uganda Central Depository Treasury Bond redemption profile for the period under 35 review. I have however advised that the profile also be reconciled with the Treasury Bond Investment Account.
3.9 Government Non-Resource Taxes (NRT) During the period under review, Parliament appropriated Shs.181,959,964,445 for various Votes to afford import taxes ( Non- Resource Taxes) on machinery, furniture and Motor Vehicles. In accordance with tax reforms introduced during the period, a total of Shs.180,990,628,113 in respect of these taxes was released to various Votes with instructions to ‘Issue block cheques (i.e., for the entire tax release)’ to the Treasury. This money was deposited on two BOU accounts; TREASURY OFFICE ACCOUNTS.GROSS RECEIPTS ACCOUNT and TREASURY OFFICE ACCOUNTS GROSS PAYMENT ACCOUNT. As at 30th June 2007 Shs.137,600,572,275 was lying idle on the Gross receipts account. In many instances it was noted that votes were appropriated tax funds far in excess of requirements, consequently eroding away funds available for allocation to other priorities within the vote’s MTEF provisions. It was also noted that in a number of cases tax obligations were paid for in excess of the individual tax appropriations for the Vote. For example, Ministry of Education had its tax obligations for the Vote settled on its behalf by Treasury yet it did not have an appropriation for it. The Accountant General explained that this was the first year of operating the Gross Tax system and certain modalities may have not been finalized. He indicated that once reconciliations with URA are finalized, the amounts standing on the account will be transferred to the UCF.
3.10 Treasury Transactions with the Central Bank (i) Transaction Delays, Errors and Mispostings The transfer of all Government bank accounts from commercial banks to the Central Bank has created increased volume of Government transactions with the Central bank. The Accountant General has time and time again
36 reported mis-postings, errors on bank Statements, delays to respond to queries and certificate of Bank balances being wrongly advised to accounting officers who do not own such accounts. Government accounts in the Central Bank are occasionally overdrawn due to errors, duplicated payments despite Treasury explicit instructions not to allow overdrawn accounts. There are also sometimes delays in crediting Treasury bank accounts. For instance a total of Euros, 3,599,000 (Equivalent to Shs.8,193,624,393) was released to B.O.U Account 208,209070.1 for Poverty Action Fund on 27th June 2007 by KFW in support of the Poverty Reduction Support Credit V-VI. The Central Bank communicated to the Accountant General on 10th July 2007 having received the funds. However, the Bank Statement indicates that the grant equivalent of Shs.8,193,624,393 was credited to the Account on 31st August 2007, more than two months after receipt of the money.
In another instance, Shs.37,296,972,081 transferred from the Customs & Excise A/C of Uganda Revenue Authority on 6/10/2006 was credited to the UCF A/C on 24/11/2006, 50 days later although the transfers should be done twice a week.
During discussions, the Accountant General explained that the Permanent Secretary/Secretary to the Treasury had written to the Central Bank expressing concern over these matters. I await the outcome of this effort.
(ii) Commission Charges For all transactions denominated in foreign currency, the Central Bank charges government a commission at the rate of 1% on the gross amount. Only the net amounts are posted to the respective bank accounts and the commission charged is posted to a special account meant for Project Bank charges. During the year, total bank charges under Treasury amounted to Shs.9,238,011,970 of which Shs.8,096,403,082 was posted to this account in respect of commissions and charges arising from foreign currency related 37 transactions. The rate and amounts charged appear to be on the high side. There is need for Treasury and Bank of Uganda to agree on more realistic rates.
The Accountant General explained that negotiations were on-going between the Ministry of Finance and the Central Bank to waive the charges and that this would be concluded by signing a new MOU. The outcome of this process is awaited.
(iii) Unexplained Transactions on holding Accounts Budget Support Grants from the donors are kept on holding accounts in the Central Bank before their transfer to the Consolidated Fund. When the grants are received the Foreign Currency is translated to local currency using the rate at the time (day) and the proceeds credited to the holding account in local currency after the bank has charged a commission of 1% of the gross amount.
However, many unexplained transactions referred to as “revalues” and “reversals” are reflected on the Bank Statements and in most cases wiping away the would-be credit balances on these accounts.
Details on Bank account No 208209038.1 show that 15,199,144,438 was received by the bank and credited on this account on 6th June 2007. This amount was wiped away by various unexplained transactions and by 30th June 07, the account showed a debt balance of Shs.4,446,462,344. The account was subsequently reconstructed following communication and meetings between the European commission, BOU and the Accountant General which resolved that all transactions wrongly made on this account be reversed resulting into a new credit balance of 8,173,566,995. However, the final position of this account was not accordingly adjusted in the accounts. The following accounts have also not been reconstructed to reflect the true position of their closing balances. 38
A/C title A/C no. Total Total Unexplained Unexplained Debits Credits
PAF A/C 208.209070.1 2,480,064,437 579,005,562
Educ Budget 208.209079.1 2,725,255,806 1,682,986,996 Support
ADB Budget 208.209196.1 4,355,594,574 2,108,406,078 Support
I have advised the Accountant General to liaise with the Central bank and have the accounts properly reconciled.
3.11 Debt Swap Over the years, government has been involved in a series of debt-swaps involving mainly state enterprises listed for divestiture. Although the funds involved are quite colossal, in many instances the debts debt swaps are never reported in governments’ financial statements and thus are not subject to my routine financial audits.
The Accountant General explained that the initiation of the debt-swap process is done by the affected state enterprise through the Ministry of Finance which then starts the process of debt-swap by constituting a debt settlement committee whose role is to verify the extent of government’s indebtedness with the assistance of the internal audit department. The committee then makes recommendations based on the findings.
On the basis of the recommendations, the Ministry approves and implements the debt-swap by preparing the necessary agreements in consultation with the Solicitor General and presents it to Cabinet and subsequently to parliament for approval. It is after approval by parliament, that the indebtedness of the enterprise is reduced in GOU records. 39
I have advised that the procedures be reviewed, documented and officially approved.
3.13 Domestic Arrears Existing procedures require that the arrears are verified by Treasury Services Department in conjunction with the internal audit and inspectorate and registered in an IT based domestic arrears database maintained at the Treasury.
However, a reconciliation of verified domestic arrears database maintained at the Treasury and the actual arrears reported in the financial statements of various Ministries, Agencies, Departments, Universities and Missions revealed variances. In some instances the arrears reported in the financial statements were more or less than those captured in the Treasury database. These variances need to be investigated and reconciled properly. Arrears Per Arrears as Treasury per Financial Vote Database Statements Variance
Office of the Prime Minister 552,375,752 901,533,958 (349,158,206)
Justice & Const Affairs 74,421,121,878 3,489,642,270 70,931,479,608
Internal Affairs 46,862,476 1,929,658,675 (1,882,796,199)
Lands 9,431,660,539 9,046,042,591 385,617,948
Health 2,890,539,248 2,959,836,104 (69,296,856)
Gender, Labour & Soc. Dev. 4,950,412,430 4,968,807,747 (18,395,317)
Water & Environment 10,607,828,000 11,396,099,000 (788,271,000)
Judiciary 1,722,991,408 5,686,766,752 (3,963,775,344)
Electoral Comm. 4,010,864,191 5,729,311,229 (1,718,447,038)
Uganda Human Rights Comm 1,567,960,324 1,934,592,630 (366,632,306)
UCDA 3,092,236,882 0 3,092,236,882 35,767,955 DPP 267,000,050 231,232,095 40
Health Service Commission - 19,317,377 (19,317,377)
ESO - 1,198,000,000 (1,198,000,000)
NEMA - 209,246,217 (209,246,217)
Addis Ababa 4,384,902 13644161 (9,259,259)
London 555,198,170 0 555,198,170
UGANDA EMBASSY IN BERLIN 556,967 61722019 (61,165,052)
41 4.0 OFFICE OF THE PRESIDENT
4.1 Non-Tax Revenue (NTR) Although Shs.66,575,778 was collected as NTR, only Shs.1,559,488 was remitted to the Consolidated Fund by end of the financial year, leaving a balance of Shs.65,016,290 not transferred contrary to regulations. In his written submission the Accounting Officer, explained that Shs.40,421,462 was transferred to Bank of Uganda by DFCU Bank on 13th August 2007 and the balance of Shs.24,594,828 was wrongly remitted to UBC account by DFCU Bank. The Managing Director, UBC had been requested to return the money to the NTR Account for onward transfer to the Consolidated Fund Account. However, by the time of writing my report, no action had been taken.
4.1.1 Liabilities The accounts show that the Ministry has total liabilities of Shs.20,809,907,490 comprising of payables of Shs.5,795,796,452 and pension liabilities of Shs.15,014,111,038.
• Included in the payables are withholding tax deductions amounting to Shs.21,875,272 which have remained outstanding for two years. No proper justification was given for not remitting the withholding tax deduction to Uganda Revenue Authority yet deductions are made at source at the time of processing payments to suppliers.
The Accounting Officer attributed the problem to the change over of the Ministry accounting systems to the Government of Uganda Integrated Financial Management System. She promised to clear it when a supplementary is approved by Parliament.
• The bulk of the pension liabilities represents (gratuity) owed to ISO staff. It was noted that little progress has been made to have this cleared and it is accumulating annually by very large amounts.
42
The Accounting Officer explained that due to resource constraints, the Ministry cannot afford to clear off all the arrears.
There is need for government to address the matter. A review of the current terms and conditions of service may assist in identifying the causes of the accumulation of arrears.
4.1.2 Non-Recovery of Vehicle Inspection of the vehicle fleet revealed that a Ministry vehicle is still with the family of a deceased Senior Presidential Advisor who passed away in December 2006. The vehicle is now in private use contrary to Standing Orders.
The continued use of this vehicle for private purposes deprives government of its assets and could affect the activities of the organization. Besides, it exposes the vehicle to quick wear and tear.
The Accounting Officer explained that following the death of the former Senior Presidential Advisor, the family was allowed to continue using the official vehicle up to the end of March 2007 when the vehicle would be returned to the office.
When the authorized period expired, the family did not return the vehicle and continued being defiant even when police officers were contacted. Several attempts were made to retrieve the vehicle to no avail. The matter has been referred to the Inspector General of Police and his response is awaited. I also await further action from the Accounting Officer.
43 5.0 STATE HOUSE
5.1 Recurrent Expenditures Charged to Capital Development
During the drill down in the account enquiry, it was established that a number of payments to the tune of Shs.664,312,400 for recurrent expenditure were wrongly charged to asset items (Development budget). This not only inflated the assets balances but also resulted into budget distortions that were contrary to the appropriations by Parliament.
The payments related to recurrent expenditure comprising of matters as set out below:-
100,000,000 Borrowing 300,000,000 refund of borrowed funds 500,000,000 Classified and general running 5,700,000 Donation 13,978,400 Transport for furniture to TZ schools 177,975,000 Training PGB Staff 21,749,000 Fuel 14,910,000 Advertising for SH Jobs 30,000,000 Fuel 664,312,400
I advised the Accounting Officer to adjust the accounts and remove the recurrent expenses from capital expenditure and the schedule of assets. Otherwise the assets stated in the accounts remain overstated by 664 million.
5.2 Non Boarding off of Vehicles
State House has 80 old motor vehicles that have been grounded in Nakasero and Entebbe while others are abandoned in various garage workshops. These vehicles were earmarked for boarding off some time back in 2004. However, the process seems to be taking long and the salvage value continues to reduce. Further still, these vehicles are packed at various places including private workshops which may lead to their vandalisation.
44 It was also noted that a number of house hold property was removed from Entebbe State House to pave way for its reconstruction and this property has been kept in containers for a long time now. Although it was anticipated that this property could be used again after the reconstruction, most of it has become obsolete or outdated and new house hold property has been bought (2007/08).
Continued keeping of property earmarked for boarding off causes loss in value and eventual loss of revenue to government.
The Accounting Officer explained that the boarding off exercise is in progress. I have advised him to expedite this process as the vehicles continue to lose realizable value.
5.3 Service Contracts for Staff on Contract
Uganda Government Standing Orders, under chapter 1 paragraphs A-j, Appointment on Agreement Terms, Sub paragraphs 2-6, require that if an officer serving under agreement terms wishes to serve another period of service, at some time not later than three months before the expiration of his or her period of service, an officer serving on agreement terms shall indicate to his or her responsible officer his or her willingness or otherwise to serve for another period of service if offered and that two months before the expiration of the current period of service, the responsible officer shall seek for the decision from the appointing authority with his or her opinion.
However during my review of a sample of 79 personnel files for staff on contract, it was noted that;
• Contracts not renewed
18 employees had their agreements expired but no efforts were made to renew them although they were still accessing the payroll. A total of
45 Shs.99,958,017 was paid to them as salaries although the agreements had not been renewed. This expenditure is irregular.
• Late Renewal of Service Agreements
It was also noted that a number of employees engaged on Contract terms do not renew their Agreements in time as required but continue to earn their salaries and only sign their contract agreement one year later and others at the time of claiming their gratuity at the expiry of their contract period.
Continued access of the pay roll by the employees whose terms of employment are irregular, contravenes Standing Orders.
The Accounting Officer explained that he had cautioned all staff serving on contract terms to strictly adhere to the provisions of their Local Agreements with Government, which require them to indicate their willingness to continue in Government service at least 3 months before expiry of their current contract
5.4 Purchased Property Not Yet Transferred
During the financial year, State House paid a total of Shs.382,000,000 as the last installment on Cheque No 54212 for purchase of property on plot 2 State House Close from an individual at a consideration of Shs.1,100,000,000.
Although the sale agreement indicates that transfer forms would be signed after payment of the last installment, the land title was handed over without signed transfer forms to effect transfer of the property to government. Management explained that the seller lives in South Africa and the forms have been sent to her for signing. I await the outcome of this process.
46 5.5 Un-accounted for funds
A sum of Shs.8,887,400 advanced to an various persons for carrying out various activities under the Poverty Alleviation Project, remained unaccounted.
TAI 2003, par 215 requires that advances be accounted for promptly.
6.0 OFFICE OF THE PRIME MINISTER
6.1 Outstanding commitments (Payables) Supporting documents for outstanding commitments of Shs.901,533,958 reported in the statement of financial position were not availed for verification. Besides payables ledger accounts were not maintained to enable me confirm accuracy and completeness of account balances.
Management explained that all supporting documents for payables would be availed together with payables ledger accounts. I await necessary action.
6.2 Statement of stores and other Assets Equipment and furniture bought at Shs.233,640,000 were not reported in the statement of stores and other assets acquired . This implied that the value of assets was understated by an equivalent sum. Besides failure to report may expose government assets to loss without trace. An explanation is required for this irregular practice.
6.3 Improperly vouched expenditure A sum of shs.99,576,870 was paid to various suppliers without proper supporting documents. The payments were based on photocopy invoices and/or estimate statements. In one case Shs.60,462,752 was paid to National water and sewerage corporation without supporting invoices or statement of consumption. This practice contravenes financial regulations and is potentially fraudulent. In response management stated that original
47 supporting documents had been traced and would be availed for audit. I await for the original documents.
6.4 Statement of Contingent liabilities A sum of shs.95,950,297 was reported in the statement of contingent liabilities as payable to two clearing firms. However supporting documents and rationale for the liabilities were not provided. A Contingent liability ought to be evidenced by constructive obligation such as advice of the solicitor General.
I advised management to seek the opinion of solicitor General on the matter.
6.5 Non deduction of withholding tax Withholding tax of shs.94,463,582 was not retained for onward remission to Uganda Revenue Authority in violation of the income tax Act 1997(as amended). Failure to recover and remit withholding tax exposes the Ministry to the risk of tax penalties. The Income tax Act requires the accounting officer to recover the tax, failure of which personal responsibility is attributed.
6.6 Northern Uganda Social Action Fund (IDA CREDIT NO.3697)
6.6.1 Non adherence to Funding mechanism According to the Development Credit Agreement (DCA), the Project expenditures were to be financed in the following ratios:- Expenditure IDA GOU category 1 Sub projects 90 % 10 % 2 Goods and vehicles 100% of foreign 10 % of local expenditures and 90 % of expenditures local expenditures 3 Consultants services 90 % 10 % training and audit 4 Operating costs 90% 10%
48 However it was noted that the project management did not strictly observe the above requirement. As at 30th June 2007 an amount equivalent to USD.1,424,950.06 from the IDA account had been used to finance activities that should have been financed under GOU counterpart funding. This practice is irregular.
Management explained that in one of the review meetings in October, 2005, it was agreed that the Project’ management should use the IDA funds to implement the Project activities and later claim the funds from the Government of Uganda. Due to shortfalls in Government counterpart funding the Government of Uganda requested for 100% funding for the Project and this was granted by the Bank in September 2007. An amount of USD 1,424,950.06 has been claimed from the Bank under Withdraw application No. 21.
6.6.2 Taxes It was noted that there were delays in remitting taxes deducted at source by project management (including with holding tax and Pay As You Earn). For example the following deducted taxes had not yet been remitted by the time of audit in October 2007:-
Date/ Purpose Amount Purpose Ref: (shs)
7/6/07 chq 50% for contract W/tax not remitted 2546 to design radio by the time of audit and TV 23,352,000 and programmes for w/tax 1,251,000 NUSAF 14/6/07 chq 14,946,033 net PAYE not remitted 2565 Gratuity for of PAYE by the time of audit period Feb04 to 6,405,443 Feb07 14/6/07 chq W/tax not remitted 2564 6,987,960 and by the time of audit w/tax 446,040 Prnting NUSAF quarterly report Jan – March 07 49 The above practice can lead to penalties from the Uganda Revenue Authority.
Management explained that the delays have arisen out of poor coordination and that the loopholes were to be addressed. Management is advised to ensure that provisions of the tax law are complied with to avoid punitive action from Uganda Revenue Authority.
6.6.3 Bank charges (shs.227,146,595) It was noted that the following charges were debited onto the project special account by the Bank of Uganda as being the costs of effecting transfers of Project funds to other banks:-
Charges Charges (UShs) Date ($) Aug-06 3,000 4,810,050 6-Sep-06 47,520 76,191,192 7-Mar-07 35,000 56,117,250 7-Feb-07 1,650 2,645,528 6-Dec-07 9,500 15,231,825 27/6/07 45,000 72,150,750 Total 141,670 227,146,595
The above charges appear to be high and had not been budgeted for.
Management explained that they are now taking up the issue through the Accountant General, to see how best Bank of Uganda can reduce on these charges.
6.6.4 General Standards of Accounting and Internal Control (i) Implementation of the SUN accounting soft ware According to the aide memoir of 6-17/June 2005, the project was supposed to have installed accounting software by 30th October, 50 2005. However, it was noted at the time of audit in October 2007, the software had not yet been installed and none of the project reports for the year under review (including Financial Monitoring Reports) were generated using the software. This shows laxity on the part of management to implement agreed recommendations.
(ii) Internal Audit The Internal Audit Department did not have an Internal Audit manual. The manual is expected to guide personnel on the procedures to be followed while undertaking all internal audit routines. Lack of it implies that work undertaken may not have been done in accordance with standard guidelines.
Management explained that the Project didn’t have an authenticated audit manual, since the consultant had not yet completed all the required terms in the contract.
(iii) Advances to staff Some project staff delayed to submit accountabilities for funds advanced to them to carry out project activities. Accountabilities totalling Shs.206,708,450 had not been accounted for by the time of audit in October 2007:-
Some of the accountabilities have been outstanding for a period of more than one year.
Delays in accounting for funds may lead to falsification of documents.
Management is advised to ensure that agreed procedures with regard to advances are complied with.
51 (iv) Advances to suppliers The Project advanced funds totalling Shs.28,676,325 to two suppliers with no advance guarantees being secured from the suppliers in question. This implies that in case of failure to deliver the project would run a risk of losing the advanced funds.
Management explained that the special condition of both contracts did not provide for an advance payment guarantee. However, they are taking up the issue with the Procurement Specialist, to see how best they can introduce such a condition in future contracts.
6.7 Motor vehicle repairs There was no certification of repairs done on project motor vehicles to confirm the quality of repairs done before payment of the garage invoices.
This implies that it is not possible to ascertain whether value for money was attained from the repairs in question. It was also noted that some repairs were authorised by a secretary as opposed to a more senior project staff. The following cases were noted:-
Date/Ref: Particulars Amount Remarks (UGS) Repairs authorised by Esther Othieno, 16/5/07 chq a secretary in 2477 8,156,835 Liaison office Service & repair of UG No 0154 z and UG 0156 Z inspection of repairs done on completion of repairs Services for Service No inspection of 16/5/07 chq and repair of UG 0190 repairs done on 2475 Z and UG0192 Z completion of 2,115,037 repairs
52 No inspection of 16/5/07 chq repairs done on 2478 Service and repair of 765,820 completion of UG 155 Z repairs
Management is advised to Institute proper guidelines on vehicle repairs to avoid wastage.
6.8 Store Keeping Although store issues are recorded on issue vouchers, there are no store ledgers maintained to show running balances of any store item. This makes it difficult to carry out reconciliations as well as stock taking. In addition, there was no stock taking/board of survey carried out at any time during the year as is required under section 7.4.1.5 of the Financial Management Handbook. This implies that any errors and omissions (whether intentional or otherwise) may go undetected.
It was also noted that purchases of project items worth shs.65,139,000 were not taken on charge (recorded in the project stores) and no distribution records were available. In the absence of the above records, it’s not possible to ascertain whether the deliveries were made and received by the intended beneficiaries.
Management explained that measures have now been put in place to ensure that all issues and receipts are properly documented, stores ledgers have been redesigned, and monthly stock counts by a Project Officer from the Directorate of Finance are being done. A stores register has been introduced at the liaison office, to avoid cases of non recording of items that are distributed from that office.
6.9 Petty Cash There was no evidence of reviews of all petty cash payments by a senior official. In addition, the project does not carry out surprise cash counts to
53 ensure that there is no misuse of petty cash. The controls regarding cash management appear to be weak.
Management explained that Petty cash control has now been strengthened. Snap checks are now carried out by our internal auditors, and all petty cash payments are being reviewed by a senior officer before cash is paid out, as well as a review by an Accountant before they are posted in the Sun Accounting System.
This will be verified during the next audit.
6.10 Procurement of Laptops A total of shs.7,950,000 was paid to a local company for three Laptop supplied to the project. However, it was noted that, the specification of the Laptops required by the office was DELL Latitude D510 but the contractor supplied DELL Inspirion 1300 contrary to the BID document. It was further noted that DELL Inspirion 1300 supplied could not be used because MS office 2003 professional software had not been installed and the CD for the same was not delivered.
Management explained that the supplier informed the Project that production of the Dell Latitude D510 was being discontinued, and therefore opted to supply the Dell Inspiron 1300 Laptops and that technically, the Laptops supplied were compliant, and this was confirmed by the MIS Department.
6.11 Fixed Assets Register It was noted that the project did not have a fixed assets register at the time of audit in October 2007. The project should maintain a record of all the fixed assets it owns which should include the following assets details:- • Asset Name, • Supplier, • Location, 54 • Unique Identification Number, • Cost, and • Condition In absence of a fixed assets register, it becomes difficult to monitor the assets.
Management explained that the Project maintains a fixed assets register in an excel file. However, at the time of audit, the register had not been modified to include all the details as noted above.
Management is advised to ensure that a proper register is established to keep track of all the project assets.
6.12 Project Staffing Position The following key staff positions were vacant at the time of audit in October 2007:- • Director Finance & Administration • NUSAF District Technical officers (7) • District accounts assistants (7)
Lack of adequate staff can lead to failure to implement all the planned project activities.
Management explained the posts would soon be filled.
6.13 Sub-Projects
6.13.1Sub-project Tracker The Project designed an excel spread sheet to record all payments and accountabilities from subprojects (subproject tracker). This is meant to ensure that a record of funds paid to each subproject is tracked and to avoid any double payments to subprojects. However, the tracker has the following shortcomings:-
55 • It is not reviewed by any other person other than the preparer. This implies that errors and omissions can easily go undetected.
• The tracker has many errors. Several subprojects have been double paid and others have not had their accountabilities posted. As such the tracker can not show an accurate status of advances to subprojects.
Management explained that they will inform the Districts that it is mandatory to always keep a copy of whatever they send to NUMU and also improve the accuracy of the tracker through the use of the Accounting software, and support from the Audit Departments at the District Levels who were trained by the NUMU Audit Department in 2007.
Project Management is advised to ensure that the integrity of the data produced by the tracker can be relied upon and also train the concerned officers.
6.13.2Physical Inspection of subprojects The audit also included an inspection of activities being implemented by the districts and the subprojects. However the most common findings included the following:- • Sub standard physical works • Use of poor quality materials e.g. weaker gauge for iron sheets • Delays in accountability for funds by subprojects • Delays in disbursement of funds from NUMU especially the GOU contribution • Incomplete structures/buildings due to delays in disbursement of funds • Defects on structures already completed • Use of subproject funds for operations by the district officials • Misuse of funds by community subprojects • Most Projects that were over funded by NUMU failed to refund the amounts over funded.
56 • Some structures funded are owned by individuals as opposed to communities. • Most subprojects having problems with ensuring sustainability of investments done. For example purchase of drugs for treatment of cows, purchase of feeds for poultry, etc.
Management explained that the irregularities cited in the sub-project implementation in the different districts ranging from sub standard physical works, use of poor quality materials, incomplete structures, and delays in accountability for funds by subprojects, were being addressed through regular consultative meetings with District Engineers and other technical staff. It was also explained that NUMU has, at such for a pointed out the different roles and responsibilities of the different stakeholders especially in the districts (where the local government officials are responsible for supervision and technical advice to the communities) on implementation of the NUSAF sub-projects. Where this capacity is lacking, the Operational Manual, provides for outsourcing support for these functions. The Local Governments have been encouraged to take advantage of this route. NUMU is also improving its monitoring, supervisory and technical support to the communities and the districts through regular visits.
Management has been advised to urgently address the matters pointed out so that the Project can fully achieve all its objectives.
7.0 PUBLIC SERVICE
7.1 Contingent Liabilities: A sum of Shs.107,000,000,000 is reported in the Statement of Contingent Liability as contingent liability relating to Military Pension. This liability has been reported on since 2003/2004 financial year. The liability was allowed in the accounts on the premise that the claims (Military Pensions) have never been verified by the Pension Authority. 57 In response to my report for the period ended 30th June 2006, the Accounting Officer explained that he had received confirmation from the Ministry of Defence that documents had been compiled. To date no documents exists, to permit a realistic assessment and settlement and/or approximation of the overall pension arrears owed in respect of retired military personnel, many of whom are now dead or living a destitute life. A court judgement recently made in favour of the pensioners awarded them Shs.1.4 trillion. I am not aware of the next course of action government is going to take to avoid incurring interest on delayed payments.
7.2 IT Strategy In the 2005/2006 management letter and subsequent discussions it was recommended and agreed that the Ministry develops an IT Strategy to guide the Ministry in implementation of IT based initiatives. To date no such a policy exists. Thus IT decisions such as procurement, maintenance, disposal, etc are taken haphazardly. The Accounting Officer explained that a draft IT policy was in place. I advised that the draft policy be expeditiously approved.
7.3 Under Establishment According to the Ministry’s revised establishment structure, a specific number of staff is required for effective implementation of its mandate. However, by end of the financial year, an understaffing of 39 staff was noted. This adversely impacts on the ability of the Ministry to offer the required services.
In his written response, the Accounting Officer explained that these vacancies will be filled in accordance with the wage provisions in the budget.
58 8.0 FOREIGN AFFAIRS
8.1 Payables
(i) Adjustments
A sum of Shs.14,626,323,766 is included in Schedule 14 for Payables as adjustments. Details as to how the above adjustments were arrived at were not availed for verification.
(ii) Kagera Basin Organisation
A total of Shs.6,879,434,865 is included in payables as liability to Kagera Basin Organisation. It was however noted that this organisation was wound up last year. It is not clear how such indebtedness is going to be treated.
(iii) Other Creditors (Borrowings)
As mentioned in my earlier reports, an amount of Shs.3,670,458,784 is still being reflected in the accounts as an overdraft. Photocopies of supporting documents which were availed indicate that this was an overdraft from Bank of Uganda incurred for expenditures on travel abroad and remittances to International Organisations in the year 2001. The documents presented were incomplete and I could not therefore verify the genuineness of the expenditures.
8.2 Travel Abroad
Government regulations require that officers travelling abroad should seek and obtain clearance from the Prime Minister’s Office as authority for their facilitation. Examination revealed that Shs.1,330,154,604 was paid out in respect of both air tickets and allowances. However, accountability tendered was found incomplete. In particular there were no coupons of travel to confirm whether the trips actually took place.
59 In addition there were no foreign exchange slips to ascertain the rates at which the funds were translated to effect payment of allowances nor was evidence of clearance by the office of the prime Minister provided.
The Accounting Officer is advised to streamline the system of accounting for funds earmarked for travel abroad.
8.3 Lack of Strategic/Corporate Plan
The Ministry only prepares annual plans (One year plans) which are presented in its Policy statements. There are no long-term plans (5 to 10 year plans) to give long-term strategic direction. There is also no clear flow of how the Ministry intends to achieve its vision in the long term. This promotes short-termism and adhoc planning leading to unfocussed service delivery and inability to achieve the organisational mandate.
The Accounting Officer stated that the Ministry resources were not enough to facilitate consultations with all key stakeholders including Missions abroad, hiring consultants and printing of final documents of the plan. He has however initiated the process which is expected to be completed in September 2008. I advised him to take advantage of the annual ambassador’s conference for consultations.
8.4 Lack of Job Descriptions
The key role of the Personnel Division within the Finance and Administration Department is to assist Line Managers to draw up job descriptions and work plans for all employees. These should specify the key objectives, key functions, key activities and key outputs required of each post holder. The work plans should indicate specific measurable, achievable and realistic tasks to be carried out during a specific period. (Post Constitutional Restructuring of the Ministry of Foreign Affairs Final Report 5.1.12). 60 It was, however, noted that there are no job description for staff other than for the Accounting officer and the Directors. The implication is that there is no basis against which staffs are monitored and evaluated.
The Accounting Officer explained that the Ministry in conjunction with Ministry of Public Service is in the process of designing job descriptions for each post.
8.5 Lack of Performance Evaluation and Appraisal
Although performance targets and goals are set for Missions, their performance is not evaluated. There was no evidence of any performance appraisal at both the individual staff level and the Mission level as a whole. Lack of a performance appraisal system for the Missions renders targets set irrelevant.
It was also further noted that the Performance goals set for the missions are not measurable and appear too ambitious for the Missions taking into consideration the meagre resources remitted to them. Goals such as “increase tourism by 30%”, “increase trade by 20%” appear too ambitious. Such ambitious and unrealistic targets indicate lack of proper risk and financial analysis of such Missions and government sector as a whole.
8.6 Payment for Electricity Bills i) Doubtful Billing-UMEME
A scrutiny of the monthly bills for the Ministry revealed that although the Ministry has only one Meter No. E245203 which would normally attract one rate, the readings on the bills are of three rates. It is not clear how such rates are derived. Furthermore, as at 26th June 2006 the meter reading was only 525 Units using the domestic rate and monthly consumption was averaging Shs.50,000 per month (May and June 2006). However under unclear circumstances, by 1st July 2006 a month later, the meter reading rose to190,600 units 61 using a different rate of “PPM_OFFPEAK MEDIUM” and the consumption rose to averagely Shs.2.5m per month. By June 2007 the consumption had reached Shs.4,314,068 in one month. The sudden rise in billings were not properly explained.
The Accounting Officer noted the concerns and promised to investigate the matter with the electricity company.
ii) Prepayments
It was further observed that the Ministry prepays for its electricity. As at 30th June 2007 the Ministry had a credit balance of Shs.23,343,076. Surprisingly additional payments are being made to the firm before utilising the earlier balances. For a period of eleven months (July 2006 to May 2007) the Ministry did not pay any electricity bills because it still had credit balances with the service provider. This is an indication of over budgeting.
Besides, the prepayments were not reflected in the final accounts contrary to regulations.
The Accounting Officer explained that the releases for utilities are made 100% irrespective of the actual consumption at the time but promised to pay against actual bills in future.
8.7 Procurements (a) Procurements without Work Plans
The procurement Reg. 96 requires that user departments make annual procurement work-plans the basis on which all procurements are made. However, contrary to regulations, the ministry spent a total of Shs.1,344,726,893 for procurement of various items without any work-plans from user departments.
62
Procurements made on adhoc basis deprive the Ministry of the benefits of bulk purchasing.
The Accounting Officer stated that a format is being developed under the guidance of the Policy and Planning Unit.
(b) Payments without Contracts Committee Approval
The procurement law requires that all procurement proposals are approved by the contracts committee. The law further encourages that all procurement transactions to be competitively bidded for. However, it was noted that suppliers who were paid an amount of Shs.382,816,635 during the year did not have the Contracts Committee approvals.
(c) Flouting of Bidding Regulations
It was noted that most of the procurements made during the year were through the restricted bidding method. Regulations require that approval of the method be sought from the Contracts Committee and that a short list of at least three firms from the pre qualified list be presented to the Contracts Committee for approval after which solicitation documents are sent to the approved firms for bidding. The bids submitted are then evaluated and contract award made.
There was however no evidence that this was done. Procurements were mostly made through presentation of invoices.
It is not certain that government got competitive prices and quality goods and services.
63 8.8 Operation of the Ministry Canteen
The Ministry has a Canteen at the First floor being operated by private individuals but there was no information or how it was contracted. No contract agreement was availed despite numerous reminders. I could there fore not ascertain the terms and conditions of the tenancy. In the absence of any agreement, government could be losing funds in uncollected rent. This arrangement has been that way since 2004 (three years).
The Accounting Officer regretted the error and informed me that although the Ministry advertised the Service, the submissions received were inadequate and that the Ministry was in the process of re-advertising to attract more competition. A formal Contract would be signed as soon as the process was concluded.
8.9 Payments for United Nations Arrears
A total of Shs.450,000,000 was paid to the Central Bank for onward transmission to the United Nations in respect of payments for subscription arrears. I was however not availed the evidence of remittance by the bank, acknowledgement by the payee and details of the period paid for. The payment therefore remains unaccounted for.
The Accounting Officer explained that he has written to the United Nations Secretariat to acknowledge receipt.
8.10 Fixed Asset Registers
Treasury Accounting Instructions state that "All purchases of plant and tools will be charged to a plant and tools item in the Ledger. A fixed Assets register will be maintained to show the location of plant and tools in daily use. This register will show the articles in the custody of each officer. All officers in charge of plant and tools will keep inventories recording each
64 article, its date of receipt, and the reference to the respective Plant and Tools Ledger.
It was however noted that a Fixed Asset register is not being maintained by the Ministry contrary to regulations. As such I could not verify asset acquisitions, additions and disposals, maintenance/service records, estimated life and retirement of assets.
The Accounting Officer explained that the Ministry was in the process of designing an integrated fixed asset register.
8.11 Returned Gross Receipts Tax Account Balances
During the financial year an amount of Shs.150,000,000 was released to the Ministry to cater for payment of import duties for goods procured. It was noted that during the year the Ministry purchased two vehicles at Shs.173,753,460 which attracted taxes totalling Shs.41,146,276.
However instead of the Ministry paying the taxes from the tax release through the Gross receipt tax account, the amount was paid from the capital development budget. In effect this tantamounts to an unauthorised reallocation of funds. The Ministry later returned all the tax funds to Treasury at the end of the year without utilising them.
The Accounting Officer explained that this was an oversight and that he has written to Permanent Secretary/Secretary to the Treasury seeking retrospective approval for reallocation.
8.12 State of Vehicles due for Board off
The Ministry has earmarked 9 vehicles and 12 Motorcycles for Boarding off (disposal) during the year. A Survey of vehicles proposed for disposal however revealed that they are located in private garages and being
65 exposed to pilferage, deterioration and damage. The effect is increase in wear and tear of these vehicles leading to decrease in the salvage value (sale value).
The Accounting Officer explained that Ministries do not have adequate storage for scrap vehicles and a coordinated effort with Ministry of Works and Transport is underway to solve the problem. He has meanwhile initiated the process of Boarding off of all the grounded vehicles.
9.0 JUSTICE AND CONSTITUTIONAL AFFAIRS
9.1 Improper Basis for Determining Ex-Gratia Compensation
According to the compensation claims database, a total of Shs.5, 733, 794,311 was approved as compensation to victims of the year 2001 rebel attacks on the convoys on Karuma–Pakwach road, out of which a sum of shs.2,148,485,948 was paid in the period under review leaving Shs.3,585,308,363 outstanding. However, the following matters were noted.
The Claims submitted were not subjected to an independent verification for occurrence and valuation. Appropriate government institutions such as the Police, Government Valuer and Chief Mechanical Engineer were not involved to corroborate occurrence or confirm valuations.
It was also noted that the compensation was made without due regard to the amount of Shs.1,385,956,297 which had earlier been recommended by Cabinet. This was to represent 25% of the certified claims. The Accounting Officer attributed this to poor coordination between Ministry of Finance and Justice. He explained that when the matter was brought to Ministry of Justice, information pertaining to who was paid and how much was not made known to her yet Ministry of Finance had already effected some part payments to some individual claimants.
66 I advised the accounting officer on the need for a documented compensation policy with proper verification and valuation procedures to mitigate the risk of exposure of public funds to loss through unauthentic claimants and inflated claims.
9.2 Weaknesses in Handling of Cases at the Attorney General’s Chambers
9.2.1 Court Award to Okema Okot Wilfred An audit review of case file No. HCCS 569/01 revealed that Shs.62,000,000 was paid to an individual as court award. However it was established that the Ministry Officers in charge of defending this case absented themselves from court with the hearing eventually proceeding experte.
Judgment was made in favour of the plaintiff resulting in a loss of public funds.
In his response, The Accounting Officer stated that at the time, the officer in charge of this case was abroad on study and Senior Civil Litigation officers had been sent on forced leave, leaving an administrative vacuum. He added that the Ministry has since acquired case management software that will assist in monitoring the progress of all court cases to ensure that all court sessions are attended.
9.2.2 Payment of Court Award to Male Salongo, T/A MB Transporters (U) Ltd. (HCC285/2004)
Following issue of a consent judgement of Shs.177,180,000 against a claim of Shs.246,500,000, a part payment of Shs.47,169,200 was made to MB Transporters Ltd in respect of transport services rendered to State House.
However, there was no evidence that supporting documentation such as Invoices and LPOs were availed and verified before Attorney General could enter consent Judgement.
67 Further scrutiny revealed that the claimant had already requisitioned for these funds from State House. The Ministry of justice effected payment without reconciling with State House. I cannot rule out a double payment of this transaction.
The Accounting Officer explained that although instructions were sought from State House no response was received from them. Subsequent reminders were sent requesting for relevant documents to enable the Ministry prepare defence but no response was received. He added that given that State House had already acknowledged the debt the Commercial Court advised on settlement of the uncontested amount.
9.2.3 Court Award to Musoke Peter, Shs.107,000,000
Audit examination revealed that M/s Peter Musoke acquired a leased plot of land (Plot 3, Water Lane, Naguru) from Uganda Land Commission several years back but, the Ministry of Lands later refused to approve his plans on grounds that the lease had been fraudulently granted since the plot had been zoned as space for the protection of a water tank and radio transmitter on Nagulu Hill.
The claimant sued government and was compensated. However, there is no evidence that the Attorney General verified the validity of the claimant’s lease agreement at the time together with the payments for annual rent.
The Accounting Officer explained that the Attorney General’s chambers requested the Government Valuer for a valuation of the property in question prior to discussing a settlement but the valuation took over 8 years to obtain, otherwise her officers had given the matter due diligence.
She added that the Ministry cannot police the performance of other government departments.
68 9.3 Indebtedness to Official Receivers Account
A total of Shs.3,472,504,560 was diverted by the Ministry from the Official Receivers account to pay for office accommodation for the Administrator General and the Registrar General Offices at Amamu House. Only Shs.300,000,000 of this has been refunded to date.
It was further noted that at US$1.2 million per annum, the charge rate per square metre for this rent was higher than market rate and exceeded the annual budget allocation, thus leading to accumulation of debts.
I recommended that the Ministry seeks for cheaper office space through competitive bidding. There is also need to have the diverted funds refunded to avert risks of litigation from beneficiaries.
The Accounting Officer attributed the necessity for diversion to insufficient funds on rent which she had already been brought to the attention of Ministry of Finance. She added that plans are under way to construct a Justice, Law and Order sector house in the longer term.
9.4 Over Expenditure on Travel Abroad Examination revealed that a total of Shs.60,532,014 relating to travel abroad was wrongly charged to other budget lines without authority. This mis-charge of expenditure indicates weakness in controls over budgetary expenditure.
The mis-charge should be regularised in accordance with the Regulations.
9.5 Failure to Operationalise Uganda Registration Services Bureau (URSB)
URSB formerly a department under The Registrar General was created by an Act of Parliament “The Uganda Registration Services Bureau Act” in the year 1997. It has been observed that ten (10) years since the enactment
69 of the law making it autonomous, the department remains under the administration of Ministry of Justice. This defeats the intentions of Parliament in enacting this law.
The Accounting Officer stated that all measures have been put in place to fully operationalise the URSB in the 2008/2009 financial year.
9.6 Staffing The most senior positions in the Ministry have not yet been substantively filled for a long time. This applies to the post of the Solicitor General, Administrator General, Registrar General, Director Legal Services and Secretary Law Council. There are also a number of other vacant posts at various levels of management. This impacts negatively on the ability of the Ministry to deliver the necessary services.
There is need for government to have these posts substantially filled to enable the Ministry discharge its duties effectively.
9.7 Breach of Contract by a Service Provider
Examination revealed that the Ministry contracted a consultancy firm for US$89,740 to conduct a financial and legal audit of court awards and compensation against the government of Uganda. The contract was to last for 4 months starting 25th June 2006.
The key outputs of the consultancy included:-
• A computerized Database, in the Civil Registry, of all civil suits against government of Uganda as at 31st March 2005.
• A computerized database of all pending war debt claims as at 31st December 2003.
70 • A legal opinion as to the liability of any of the parties, in pending legal suits exceeding the amount of US$50,000 as at 31st December 2004 collated in tabular format and arranged by day, month and year.
• A tabulated report of potential government liability based on the legal opinion above.
• A tabulated report of current government liability, including accrued interest for suits where final judgment has been entered, and with no pending appeals.
However, the following matters were noted:-
a) Whereas there was an already existing computerized database system in place, there is no evidence of an evaluation carried out including consultation with stakeholders, to justify a new system.
b) Proper justification was not provided for not using a competitive tendering process in the selection of the consultant.
c) There was an unnecessarily long delay in completing this report.
The Accounting Officer acknowledged the delays, and further explained that a draft final report was being discussed with the consultant. In spite of this, I could not confirm that Value for money was realized from this expenditure.
10.0 FINANCE, PLANNING AND ECONOMIC DEVELOPMENT
10.1 Energy Fund
During the period under review, Shs.99,400,000,000 was appropriated under the Energy investment fund project in respect of ‘supply of goods and services item 224002’. The appropriated funds were wholly released to
71 the Ministry and were subsequently transferred to the Energy Fund Account in Bank of Uganda.
In May 2007 the Ministry signed on behalf of Government Of Uganda (GOU) an agreement with Uganda Electricity Transmission Company limited (UETCL) in which it was agreed among others that: -
(a) GOU shall transfer US$75,000,000 from the Energy Fund Account (EFA) to UETCL. The later shall enter into a loan agreement with Bujagali Energy Limited (BEL) solely for the purpose of making advance works payment under the Limited Notice to Proceed Agreement.
The Loan agreement shall inter alia, contain the following conditions: -
• UETCL shall disburse the US$75,000,000 directly to Salin Construttori S.P.A the contractor of Bujagali Hydro Electricity Power Plant under the EPC Contract.
• The loan amount shall be repaid to the UETCL upon Bujagali Energy Ltd. reaching the financial closing.
(b) UETCL shall upon receipt of the repayment of the loan amount of US$75,000,000 from BEL remit the same to the EFA.
In accordance with the agreement, Shs. 99,332,050,000 was subsequently transferred from the EFA to Bujagali Hydro Power Project Transmission Line Resettlement Action Plan Account (RAPA). A review of the documents filed in support of the Energy Investment Fund transactions was made and the following matters were noted:-
(i) Unexplained Sources of Funding
While only Shs. 99,400,000,000 was appropriated, up to Shs. 127,346,707,140 was remitted to the contractors. In her
72 response, the Accounting Officer explained that the additional Shs 27,946,707,140 was drawn from the Divestiture Accounts based on the DRIC 347th meeting decision. The regularity of Privatization Unit intervention in the transaction is was not explained.
(ii) Refund of the Funds
A total of Shs.127,346,707,14 was remitted to the contractors. Although the Accounting Officer explained that the amount of US$ 75,000,000 has since been recovered in its entirety, I was unable to verify this and ascertain whether the recoveries were remitted back to the Energy Fund Account as required by the agreement.
(iii) Improper Classification
Since it was agreed that all US$75,000,000 paid to the contractor is a loan recoverable upon Bujagali Energy Ltd. reaching the financial closing, it was erroneous to recognise the payments to EFA as expenditure. Instead the transaction should have been recognised as an on-lent.
(iv) Uncredited Transfer from EFA to RAPA
On 31/05/2007 a debit of Shs. 43,951,700,000 was made on Energy Fund Account being transfer of funds to Resettlement Action Plan Account (RAPA). However, according to the “credit advice” only Shs 43,744,700,000 was credited to RAPA. The variance of Shs. 206,960,000 was not explained to satisfaction.
The Accounting Officer explained that the difference represents foreign exchange loss on the translation. I have however explained to the Accounting Officer that the charges by Bank of
73 Uganda are unrealistically high. There is need for Government to negotiate with Bank of Uganda and agree by way of a Memorandum of Understanding on the appropriate and realistic charges applicable to Governments transactions.
(v) Legality of the Energy Fund
The creation of the Energy Investment Fund was not done in accordance with Public Finance and Accountability Act, 2003. The Act requires that a special fund be established by way of Statutory Instrument issued by the Minister. However, this has not been done. There is also lack of clarity on which Ministry is responsible for managing this fund. The Ministry of Energy also has budget appropriations made for the support to the Energy fund. There is need to have the Energy Fund legalised and its operations properly streamlined.
10.2 Excess Expenditure
A total of Shs.20,671,363,812 was spent by the ministry on import taxes on equipment and motor vehicles against an appropriation of Shs.17,879,000,000 leading to an excess expenditure of Shs.2,792,363,812. The Accounting Officer explained that a request for supplementary expenditure to clear the over expenditure had been made (on February 25, 2008) to the Permanent Secretary/Secretary to the Treasury for laying before Parliament. I was not however provided with evidence of approval of the supplementary by Parliament.
10.3 Funds allocated but not disclosed in the Financial Statements The Ministry was allocated Shs.433,740,000 under statutory budget to cater for: External Interest (Shs.51,300,000,000), External Amortization (Shs.174,800,000,000), External Arrears and Domestic Interest (Shs.207,640,000,000). While transactions relating to domestic interest (TB/Bonds) are rightly recorded/recognized in the Ministry accounts
74 Shs.226,100,000,000 in respect of the three other categories are not recognized in the accounts at all. The Entity's accounts i.e., Statement of Finance Performance, Statement of Finance Position and cash flow statement are therefore grossly understated.
10.4 Salary Arrears During the financial year ended 30th June 2007, Shs.4,786,200,500 was advanced to various Accounting Officers in Ministries and Districts to cater for salary arrears. At the time of writing this report only Shs.2,880,616,507 had been accounted for leaving a balance of Shs.1,905,583,993 unaccounted for. In the absence of accountability, I was not able to ascertain that the funds were utilised for the intended purpose.
The Accounting Officer explained that she had written to the concerned Accounting Officers who have not yet forwarded their accountabilities to do so. The out come of her action is awaited.
10.5 Contingent Liabilities
On 30th June 2006 total quantifiable contingent liability was Shs.4,200,000,000, representing Custodian Board debts to be inherited by government. During the period under review, additional contingent liabilities of Shs.2,000,000,000 and Shs.906,000,000 in favour of an advocate and Kampala City Council were recognised. The basis of these contingent claims was not satisfactorily explained.
I advised the Accounting Officer to have these claims urgently investigated for their authenticity in order to mitigate against any risks of future fictitious payments.
10.6 Payments to Foreign Consultancy Firm
During the financial year under review, Shs.270,000,000 was paid to a commercial bank, for remittance to a foreign consultancy firm in respect of a consultancy for Promoting Uganda's Export and Investment 75 Opportunities. The payment is yet to be acknowledged by the consultant. Performance reports in respect of the consultant for the period under review were also not submitted for my review. I was therefore not able to confirm that the amount was received by the beneficiary.
10.7 Flouting of the Public Procurement Regulations
A sum of Shs.224,564,040 (US$131,324) was spent by the Ministry on procurement of 2 motor vehicles (Wagon). The procurement was neither advertised nor approved by the Contracts Committee. This practice exposes the Ministry to the risk of high pricing and procurement of substandard goods. The Accounting Officer explained that the action taken was inevitable because two Ministers had been newly posted to the Ministry and there was an urgent need to provide transport for them.
10.8 Under Establishment
According to the Ministry revised establishment structure, for effective implementation of its mandate 769 staffs are required. However by the end of financial year, only 684 posts were filled while 85 posts were vacant. The accounting officer explained that the posts have been advertised but Public Service Commission has been slow in effecting interviews and subsequent appointments.
10.9 Improper Maintenance of Fixed Asset Register
As part of the on going financial reforms, in May 2007, the Accountant General instructed all Ministries to migrate to an IT-based Fixed Asset Register (FAR): Fixed Asset Management (FAM), to track physical existence, conditions and locations of government’s fixed assets. By the time of filing this report, MOFPED was still using the defective manual registers despite being the lead Ministry in the reform initiative.
76 The Accounting Officer pledged to migrate to the new system before the end of 2007/08 financial year.
10.10 Population Secretariat Project: Lack of Corporate Status
Examination revealed that the secretariat has no corporate status to enable it carry out its mandate effectively. I have advised management to speed up the process of acquiring the corporate status.
The Accounting Officer explained that a Cabinet Memorandum has been developed and submitted to Cabinet. Once passed it shall operationalise the revised population policy 2007 and recommend the enactment of a law that will transform the Secretariat into an autonomous institution.
11.0 AGRICULTURE, ANIMAL INDUSTRY AND FISHERIES
11.1 Unauthorised Expenditure According to the statement of appropriation account (based on services voted by Parliament) the Ministry incurred excess expenditure on consumption of property, plant & equipment (fixed assets). Whereas actual expenditure was Shs.2,114,818,353 the approved budget was only Shs.1,986,200,000 resulting into unauthorised excess expenditure of Shs.128,618,353.
The Accounting officer explained that the excess expenditure arose from taxes paid on its behalf by the Ministry of Finance. I advised him to seek authority from Ministry of Finance to regularise the expenditure.
110.2Advances Not Accounted For During the year a total of Shs.366,308,000 was advanced to various chief administration officers for the execution of various official activities in the areas under their jurisdiction. However, contrary to regulations the funds had not been accounted for by the time of writing this report.
77 In the absence of accountabilities, I was unable to confirm that the funds were properly utilised. I advised the Accounting officer to strengthen the internal controls over the management of advances.
11.3 Government Assets (a) Government Land Available records indicate that an inventory of land under the Ministry was compiled basing on the information submitted by the Chief Administrative Officers (CAO) in the year 2002.The following observations were made: -
• No effort since the year 2002 has been made to confirm the accuracy of the list and make any additions, which could have been omitted.
• The land identified has never been surveyed and there were no land titles processed to confirm ownership.
• Available correspondences indicate that Government land has been subjected to severe encroachment by the surrounding communities or outright grabbing by unscrupulous people. For instance one of the correspondence from State house, indicates that land at Kazinga- Ngoma sub county Ntungamo Districts, measuring approximately 100 acres, which has been known to belong to the Ministry, was not secured and some neighbours decided to take advantage and grab the land. They have since disagreed and have been in court and recently the High court ruled in favour of one of the parties.
In a related development, the Minister of Agriculture, Animal Industry and Fisheries complained to the Office of the Prime Minister about the unfair ruling on MAAIF land at Entebbe
78 Livestock Experimental Station which CAA wants to use and had obtained a land title for the said land belonging to MAAIF. When the matter was brought before cabinet, a sub- committee chaired by the Hon. Prime Minister was assigned to resolve the dispute, but ruled against MAAIF.
Alleged Sale of Veterinary Estates in Kigungu A Fisheries officer reported that arrangements were in advanced stages for some crafty land dealers with connivance of some local council members to sell off some veterinary estates in Kigungu and had already surveyed the land.
In his response the Accounting officer explained that the ministry set up a land task force to identify and verify the Ministry land countrywide and so far land in western Uganda has been verified and the process of identifying and titling land in other regions will commence soon. On the alleged sale of Veterinary estates, he was investigating the matter.
I advised him to expedite the process and also to liase with other Government agencies like Police, Chief administrative officers, and the Judiciary to put caveats and evict unauthorised encroachers. Meanwhile the outcome of the task force and investigations is awaited.
(b) Unengraved Government Property An inspection of government property at the Ministry headquarters revealed that some furniture, equipment and machinery are not engraved, which subjects them to the risk of misappropriation and embezzlement.
79 During discussion the Accounting officer stated that he was going to mobilise funds to undertake the engraving exercise. I urged him to expedite the exercise.
11.4 Cash and Cash Equivalents (a) Unexplained Variance The cash and cash equivalents of Shs.1,276,918,424 shown in the accounts does not reconcile properly with the general ledger reconciliation and the relevant explanatory note 20. Whereas in explanatory note 20 the reconciled balance on the expenditure accounts was recorded as Shs.1,267,339,148, in the reconciliation statement it was shown as Shs.1,233,001,369 resulting into unexplained variance of Shs.34,337,779. Similarly, in the same explanatory note there are unexplained balances of Shs.400,000 and (464,776) on collection accounts and others respectively which were not explained.
The Accounting officer explained that a reconciliation of the treasury General Account would address all the issues above. I urged the Accounting officer to expedite the process of reconciliation of the Treasury General Account.
(b) Un-presented Cheques The General ledger reconciliation shows un-presented cheques totalling Shs.3,895,231,161 out of which cheques amounting to Shs.210,013,987 have remained outstanding for more than one year.
The Accounting officer explained that the unreconciled difference was a systems generated error and was still carrying out consultations with the Accountant General to address the issue while
80 for the un-presented (stale) cheques he had written to BOU and awaits its response.
I advised him to expedite the consultations to ensure reconciliation of the account and reversal of the stale cheque transactions.
11.5 Audit inspections (A) DOHO Rice Scheme The scheme is found in Bunyole County in the new district of Butaleja in Eastern Uganda. Rice growing in the area started in the 1940s when farmers were asked to grow rice by the colonial government, for soldiers during World War II. The farmers faced several problems ranging from inability to control rice blast disease, damage of the crop by birds and rats to low yielding varieties. The Government came to their rescue in December 1975 by bringing in the Chinese experts and posting some personnel to develop the swamp under the name of Doho Rice Scheme.
Construction of the irrigation and drainage structures was completed in 1989 resulting into the reclamation of 2500 acres. The actual area under cultivation is 2380 acres and about 4340 farmers are currently cultivating rice in the scheme. The following observations were made:
(a) Rehabilitation of the Scheme The Ministry entered into an agreement with a company for the refurbishment and rehabilitation of the scheme at a contract sum of Shs.442,368,296. To-date a total of Shs.198,873,869 has been paid. However, it was noted that implementation has been very slow due to lack of funding of the contract by the Ministry. The project outputs may not be
81 achieved if funding is not provided for the completion of the rehabilitation.
(b) Encroachment on Government Premises. A number of Government facilities at the scheme were encroached on without authority. For instance almost all stores are occupied with private property, some housing units, which were meant for the project staff, are occupied by unknown people, and accessibility to the station, is not restricted particularly at the eastern gate.
The Accounting officer explained that it’s only the staff serving on the scheme that occupy the station’s residential units. All other occupants are supposed to be paying rent which is yet to be determined. He further noted that accessibility to the station is restricted but this has been hampered by lack of a perimeter fence.
I advised him to evict all illegal occupants of Government premises and also to put up a perimeter fence.
(c) Abandoned machinery and equipment All machinery at the station in the carpentry, welding and fabricating, machine mills workshops and water pump were either found abandoned or redundant and not used for any gainful activities to Government.
In a related development, wind blew off the entire structure of the carpentry workshop close to a year now, which has exposed the machinery and equipment to direct sun rays, rainfall and all other vagaries of nature.
82 During discussion the Accounting officer explained that plans to renovate the facilities were underway. I urged him expedite the process.
(d) General Appearance of the Station. Generally the station is not well maintained. It was in a bushy environment. This was probably explained by lack of funding for the station from headquarters. Apart from the salaries for staff, there was no imprest for the station manager to enable him run the station properly.
I have advised the Accounting officer to ensure that the station is properly managed by providing the required resources.
(B) Olweny Swamp Rice Irrigation Project The scheme is located in Agwata Sub-county, Dokolo County, Lira District in Northern Uganda. Available records show that a feasibility study for the project was carried out in 1982, with the hope of implementing it between 1987 and 199, but got delayed because of the insecurity which was in the region, incomplete feasibility at the time of project approval and high costs that were required to implement the project.
The financiers of the Olweny Swamp Rice Irrigation project (OSRIP) were the African Development Bank (ADB) and Government of Uganda (GOU).
Objectives of the project • To demonstrate research, extension and farmer linkages.
83 • To be a model design for sustainable wetland development to be replicated in other parts of the country for developing gravity–fed irrigation. • To popularise production of high value crops for poverty alleviation. • To increase rural employment and food production.
The project was developed into two different sites, each with its own irrigation system:
The Nucleus Farm (NF) The NF is the headquarters of OSRIP and is located in Agwata, Dokolo, Lira District. It is a 50 hectare farm and is used for seed multiplication, research and training of farmers.
Otek-Okile Small Holder Project It is also a smallholder rice scheme of 600 hectares. It is located upstream in Sub-counties of Barr and Amach in Erute south, Lira and irrigation and drainage in the scheme is by gravity.
The following observations were made: (a) Termination of Project Activities The project activities were terminated at all the project sites above and all technical staff withdrawn or laid off. At Otek-Okile, farmers under their umbrella organisation called Growers cooperative society run the station and offices. I was not provided with the terms under which the premises and other project assets were allocated to them. Similarly at the Nucleus firm, the station is completely abandoned and bushy with no sign of activity, there is only the stores assistant managing the stores and the station.
84 I advised the Accounting officer to come up with a clear position about these valuable projects and if Government was to pull out, how the projects will be run.
(b) Projects Assets The projects have a number of assets and assorted stores whose status is unknown considering the uncertainties surrounding the future of the projects.
I advised the Accounting officer on the need to clarify on the whereabouts of the assets and how they are going to be disposed off in case Government decides to withdraw it’s interest in the project.
The Accounting officer explained that the Ministry through the procurement process has put in place a team, which will survey the items with a view to isolating those due for disposal.
(c) Staff Quarters (Estate) at the Nucleus Farm. The staff estate at the Nucleus Farm has fourteen (14) housing units, some of which at the time of inspection were occupied by unknown people. The terms of occupancy of the premises and how they were solicited were not explained.
The Accounting officer explained that the staff quarters were formerly occupied by support staff who were eventually laid off under the restructuring process and due to insecurity by then in the Northern region they could not return to their homes but with peace returning to the region, they will be soon moving out of the quarters.
85 I have advised the Accounting officer to secure Government property from illegal occupants.
11.6 Stores Inspection An audit inspection of the Ministry’s main stores at Wandegeya revealed that various assorted stores that have not been issued out or claimed from the stores since 1996 and are now obsolete. The rationale for the acquisition of such stores is questionable if they could not be put to use for all that time, and also casts doubt as to whether there is proper planning for the use of the scarce resources.
I advised the Accounting officer to ensure that that stores once purchased are utilised for the purpose for which they were acquired.
The Accounting Officer explained that the obsolete items are supposed to be destroyed but the destruction costs are too high.
11.7 Vegetable Oil Development Project: IFAD LOAN NO.442 – UG
11.7.1GoU Counterpart Funding According to the budget, Government of Uganda was supposed to contribute shs.794,197,000 as counterpart funding and shs.1,200,000,000 for land acquisition for the year under review. However, only Shs.214,157,000 was released as counterpart funds and no release was made for land acquisition, leading to a shortfall of Shs.580,040,000 for counterpart funding and Shs.1,200,000,000 for land acquisition.
This affects the timely implementation of programme activities.
Management explained that U.Shs.2 billion has been provided for in the 2007/08 budget for land acquisition of which Shs.1 billion had so far been released. It is expected that this financial year, counterpart will be availed as budgeted. 86 11.7.2Fixed Assets Management a. Fixed Asset Register It was noted that Kalangala District does not maintain a fixed asset register. Lack of a fixed asset register weakens controls over the management of assets.
Management explained that the concern had been raised with Kalangala District and they have clarified that the district maintains a general assets register used for all district assets, which was not accessible at time of audit. The District Agricultural Officer had also been advised to open an assets register at his level for project assets. b. Engraving of Assets It was noted during the audit that some Project assets were not engraved with the project name and unique identification numbers. For example the following assets were not engraved:- Asset Location 2 Filing cabinets Kalangala Oil Palm Growers Trust (KOPGT) 9 Office desks ,, 3 UPS ,, 10 Office chairs ,, 1 Dell CPU ,, 2 Laser et printers ,, In the absence of unique identifying marks, it becomes difficult to trace the asset incase of loss.
Management explained that the assets had just been bought by Kalangala Growers Trust and the Coordination Office had written to them urging them to urgently have the assets engraved as per government rules and procedures.
87 c. Quarterly reports According to appendix X of the Kalangala Oil Palm Growers Trust (KOPGT) operational manual, KOPGT is supposed to submit quarterly reports to the Ministry of Agriculture Animal Industries and Fisheries (MAAIF) through the Project Coordinator. In addition, the Project Coordination Office (PCO) is supposed to respond to each report with regard to timeliness, level of detail and accuracy. The PCO is also supposed to address specific queries on the reports to KOPGT and make recommendations for future reports.
Whereas KOPGT has been submitting the reports as required, the PCO has not been responding to the reports.
Management has noted the concern and will in future acknowledge receipt and give response in writing to KOPGT. d. Bye-laws According to appendix X of the KOPGT operational manual, a draft of bye laws to govern the trusts detailed operations would be prepared immediately upon the registration of KOPGT, possibly with the assistance of a local consultant to be hired by the PCO.
The bye-laws would include:- Financing terms and conditions Repayment modalities Sanctions for defaulters Rules regarding the staff and board members participation in the oil palm growers scheme. Details of hire/purchase scheme for staff motorbikes. Allowance rates for board members and remuneration and allowance rates for staff.
88 KOPGT has been in operation for one and a half years now and yet no bye laws have been drafted to guide the operations of KOPGT. Management explained that they will facilitate KOPGT to prepare the by laws, that will serve as a reference for managing the farmer-KOPGT relationship, to be used when the project closes. e. Oil Palm Pricing Committee According to Article 8 of the Tripartite Agreement between the Government of the Republic of Uganda, Oil Palm Uganda Limited (OPUL) and the registered trustees of KOPGT, an oil palm pricing committee was supposed to be in place based on the Government of Uganda –BIDCO cooperating agreement. The committee was supposed to be appointed by Government to carry out the following tasks:- To oversee the pricing of inputs and services under the oil palm growers scheme; and To determine the price at which small scale farmers sell their output to OPUL. However at the time of audit in December 2007, the committee was not yet in place, suggesting that if the out growers are subjected to unacceptable prices they would have nowhere to appeal.
Management explained that arrangements are under way to have the pricing committee constituted to provide a forum for determination of prices using a formula that has already been agreed on by government, KOPGT and Oil Palm Uganda Ltd. f. Status of Project implementation According to article 3(2)(f) of the cooperating agreement between the GOU and OPUL government was to provide 30,000 hectares of land, 10,000 on the island and 20,000 on the main land to enable them produce to full capacity.
89 However at the time of audit in November 2007, the project had only secured approximately 9000 hectares at the island.
This has made some of OPUL’s equipment redundant and therefore makes the Government vulnerable to litigation as a result of non-compliance with the agreement provisions.
Management explained that implementation of the Oil Palm component is in phases. The focus has been on the first phase which is on Bugala Island. The land required on the Island is almost met. Efforts to purchase the remaining 1000 hectares are underway. Shs.2 billion has been provided for land acquisition. The Outgrower/Smallholder scheme is also progressing with close to 2000 hectares surveyed and planting on going. g. Delay in Processing Farmers Loans It was noted that processing a farmers loans on average takes about four months. Some of the loans are for slashing or planting oil palm. The delay may imply that by the time some of farmers obtain the money seasons may have changed making these loans susceptible to being misused because the funds are secured when the time for the intended purpose has passed.
Management explained that they have recognized the lengthy period in accessing farmer loans and have decided to provide for an advance to KOPGT Secretariat for farmer loans, depending on the quarterly loan requirements. The advance will then be accounted for and replenished. In addition, farmer training in filling the application form has been undertaken to ensure that no applications are returned to farmers for correction. Applications will be handled as and when they are submitted, without waiting for all the farmers to submit. These efforts will reduce the turn around time for the farmer loans to less than one month.
90 h. Security of Farmers Loans According to Para 8 of the KOPGT operational manual, the criteria for a farmer to participate in the loan scheme stipulates that a farmer would need to pledge his/her land tenure rights for the useful life of the plantation in form of a land title or certificate of occupancy with KOPGT. The useful life of the plantation was assumed to be 25 years or in case the documents were not available a letter by the Local Council (LC) 1 chairman and two other LC1 committee members confirming 12 years occupancy. However it was noted that farmers were participating in the scheme and obtaining loans without fulfilling the above requirements.
Management explained that the oil palm plantation itself is loan security, which, according to the farmer agreement, can be taken over by KOPGT in case of mismanagement, until the loan is repaid using proceeds from the plantation. The farmers will sell their oil palm bunches to one factory at the nucleus estate. Recovery of the loans will be effected at point of sale, hence minimizing the risk of non repayment. i. Road Equipment It was noted that the project procured a motor grader at a cost of US$.272,589 and a wheel loader at a cost of US$.201,052 from M/s. Panafric trucks. The equipment was handed over to Kalangala District Local government Administration to be used by the District and KOPGT. However, no guidelines were put in place to guide the sharing of the equipment. In the absence of proper guidelines it becomes difficult to know the rights of the stakeholders and how they are supposed to share maintenance costs. This could result in disagreements in future.
Management explained that the road equipment is under the control of the Chief Administrative Officer (CAO) as the accounting officer Kalangala Local Government. The KOPGT as and when they require to use the equipment will make a request to the CAO, requesting for the equipment. The CAO will 91 determine the use of the equipment including how operational and maintenance costs are to be met. The CAO is also in charge of the project activities and oversees the KOPGT activities in the district.
I have, however, advised him to have these guidelines properly documented. j. Assessment of rate of delivery of output During the year under review, it was noted that expenditure for the Project was generally below budget as indicated below :-
Component Budget(shs) Actual(shs) Variance(shs) Oil Palm 5,567,017,521 2,739,092,258 2,827,925,263 VODF 2,061,112,000 481,297,575 1,579,814,425 Institutional Support 3,497,580,099 2,996,697,962 500,882,137 TOTAL 125,709,620 6,227,087,795 ,898,621,825
This may imply the following:- • The project has a low absorption capacity • Lack of proper planning or budgeting • Slow rate of project implementation. • The above may lead to extra administrative costs as a result of extending the Project life.
Management attributed the delays to:- • Delays in the procurement of roads equipment that was not concluded in time to enable payment for the equipment. • Delays taken in identifying a private investor to co-implement the Project. • Delays in identifying land.
92 12.0 LANDS, HOUSING AND URBAN DEVELOPMENT
12.1 The Pool Housing Fund In September, 1994, Government of Uganda represented by the Ministry of Finance and Economic Planning signed an Agency contract with the Housing Finance Company of Uganda Limited (HFCU Ltd) which allowed to have the proceeds of the sale of pool houses deposited with HFCU Ltd the agent, extension of mortgage facilities to public servants to acquire such houses and to use the fund to provide mortgage finance to the general public. The fund was opened to receive deposits from public servants who had been allocated government pool houses.
The offer letters seen indicated that the beneficiary was required to deposit Shs.3,000,000 into the fund within 12 months upon receiving the offer while waiting valuation of the property by the Chief Government Valuer.
It was also a requirement for the beneficiary upon receiving the value to deposit a valuation fee of 0.125% of the purchase price into the pool houses sales committee Account in Stanbic Bank, IPS Building on Parliamentary Avenue.
After valuation of the property, the beneficiary was required to deposit 8% of the value as down payment upon which the title was to be transferred into the buyers name and forwarded to HFCU Ltd for execution of mortgage for the outstanding balance.
However the following are my observations:
(a) To date there is still no Parliamentary resolution to authorise establishment of the above revolving fund despite the Minister of Finance request to Parliament made in November 2004 and January 2007. It appears that the fund is still being operated illegally.
93 The accounting officer explained that the ministry had requested the Minister of Finance to consider issuing a statutory instrument establishing this fund as a special fund for housing development in the country to which he has received no response.
(b) Available information regarding the account in Stanbic Bank IPS Building indicates that the account was opened for collection of operational funds for the operation of the pool houses sales committee. However, I have not been able to establish the balance on this account as at 30th June 2007 because the signatories have not changed from the Accounting Officer Ministry of Works and Public Service .It is not known how much money lies on this account and what it is used for.
(c) The status of the rent payments as at 30th June 2007 has not been established.
The status report on the fund released by the HFCU Ltd as at 30th June 2007, revealed the following matters:
(i) A total of 261 beneficiaries were offered properties and paid up the initial deposit of 8%, but have not yet executed mortgage with the Housing Finance Company of Uganda Ltd as specified in close A6 of the terms of offer. The value of offers outstanding in this category is Shs.5, 062,500,000.
The Accounting Officer explained that this category has a mandatory period of one year within which they are required to execute mortgages and that it had not expired.
(ii) A total of 95 beneficiaries in various districts have had their titles processed but have not executed mortgages with HFCU Ltd. I could 94 not tell whether their offers were still valid as the offer dates were not disclosed in the files.
In his response the Accounting Officer explained that the beneficiaries had since been notified to execute their mortgages by December 2007.
(iii) Shs.456, 552,780 has been collected from 343 properties which were offered to public servants without valuation. These are properties around Kampala, Ntinda, Entebbe and a few in Jinja. I do not know why such valuations of nearby areas have taken that long.
The Accounting Officer explained that these were condominium properties whose plans were not yet ready and that the majority of the beneficiaries were making their payments as scheduled. He also stated that for the property in Kampala, Entebbe and Ntinda they had been inspected by the Chief Government Valuer.
(iv) 150 beneficiaries were allocated properties but have never deposited any money with HFCU Ltd towards the purchase of their houses. These are mainly in areas in Kampala, Kololo, Entebbe, Jinja and some upcountry districts of Moroto and Masindi. This violated the terms of offer that required them to deposit Shs.3,000,000 within one year of offer. Majority of these offers were made in 2006 and some in January 2007 and are worth Shs.3, 639,300,000.
The Accounting officer explained that the mandatory period 12 months had not lapsed and that an advert had been made urging the affected beneficiaries to fulfil their obligation or else their offers would be revoked.
95 I advised him that all those offers for which no money has been received yet should be sent a reminder if they are still within the 12 months period.
(v) 131 beneficiaries have not fully paid the 8% down payments and their grace period has expired. Offers in this category are worth Shs.2, 229,800,000.
In his response, the Accounting Officer explained that the beneficiaries have been given a grace period of 30days in which to fulfil their obligations after which their offers may be revoked for non payment.
I advised him to consider cancelling those offers whose grace period has expired before making the down payment and have them referred back to the pool houses sales committee.
vi) VAT Payments to URA During the year under review it was observed that on a monthly basis a constant figure of Shs.170,219,432 was being paid to URA in respect of assessed VAT on sales of pool houses. The authority and basis used to arrive at the assessed amount was not explained.
The Accounting Officer explained that these were arrears whose repayment schedule had been negotiated between HCFU Ltd and URA. It was also explained that an appeal had been made in the Commercial Court and HFCU had been asked to stop the remittances to URA until the matter is resolved.
12.2 Land Acquisition a) Further to my observation in the Annual Report for 2005/06, (Para 11.3) during the year under review, an additional payment of
96 Shs.186,600,000 was made to a Land owner towards purchase of his land in Mutungo comprising of 5 titles which was acquired for security reasons. This is in addition to an earlier payment made to the same person of Shs.884, 530,000 during the previous financial years.
The valuation report dated 17th September 2004 indicates that this land was valued at Shs.1,110,000,000 and the Landlord has so far been paid Shs.1,071,130,000. However Plot 67 has a caveat fixed by the administrator of the estate of the late William Serwadda dated April 2005.
The Accounting Officer explained that the issue is still before court and has not been concluded. b) In a related development, a total of Shs.311, 000,000 was paid during the last two years to various persons in respect of compensation for compulsory land/ranches acquisition by government.
A copy of the valuation report seen for the ranches, (Ranch No.33 covering 638 hectares in Ankole ranching scheme and ranch No.19 covering 885 hectares in Singo ranching scheme) indicates that the government has not fully paid for these ranches and as such cannot have the titles. So far government has paid Shs.120,000,000 leaving a balance of Shs.222,260,000 for both ranches unpaid.
The land at Isingiro (2076.24 hectares/5130.39 acres) comprising 9 titles was valued at Shs.373,000,000 of which Shs.191, 000,000 has so far been paid. The valuation report for this land indicates that 5 titles are free from encumbrances while the remaining 4 titles valued at Shs.195,000,000 are encumbered. I have advised the Accounting 97 officer to handle the issue to its final conclusion because any further delays may lead to complications.
I was also not availed with any of the above titles to confirm their transfers to Uganda land commission.
12.3 Cash Payments Examination of expenditure for the year under review has revealed that Shs.1, 864,727,946 (See details below) was drawn in form of cash under various heads of departments as official advances to carry out various activities. This represents 38% of the Ministry’s annual budget. The expenditure exceeded the authorised imprest warrant of Shs.756,000,000 by Shs.1,108,727,946 contrary to regulations.
I have advised the Accounting Officer to discourage cash payments and where necessary operate within the imprest limits authorised by the Accountant General.
12.4 Un-completed Projects The following projects being implemented by the Ministry are registering very slow progress and may not achieve their intended objectives. They include:-
Project Amount Budgeted Amount % of Anticipated Amount Released Budget (Shs) Re- 3,123,000,000 123,057,000 123,057.000 3.9% development of Kyabazinga Palace Residences of 500,000,000 121,000,000 121,000,000 24% a former Head of State Markets and 4,600,000,000 70,000,000 70,000,000 1.5% Workplaces around Kampala
98 • Redevelopment of the Kyabazinga Palace (0965) The above palace was vandalised by the Military police who occupied it between 1966 and 1979 after the abolition of Kingdoms in 1966. The government then undertook to renovate the palace.
Funding of Shs.3,123,000,000 was anticipated in the financial year 2006/07 to enable completion of phase one of the project as per the Ministerial Policy Statement. However, only Shs.123, 057,000 was budgeted and approved by Parliament representing 3.9% of the required amount for the year. With this amount very little could be implemented.
• Completion of the former Head of State Residence In 1993 H.E the President during his visit to Kitgum district pledged to rehabilitate the residences of a former Head of State; one located on Palabek Road, Kitgum town and another located at the Kitgum Hilltop.
During the year under review Shs.500, 000, 000 was planned to be spent on the project as per the policy statement. However only Shs.121, 000,000 was budgeted and approved by Parliament for the above project, representing 24% of the approved budget.
• Project 0967 – Markets and Work Places in and Around Kampala The above project was conceived during H.E. The President’s tour of the city suburbs. During inspections of markets His Excellency noticed the appalling situations in the market areas and directed that some markets be cemented and other workplaces be sheltered. The first markets to be worked on included Kalerwe, Kizito and Nakulabye.
99 The objective was to improve hygienic standards in the markets that handle foodstuffs intended for human consumption, and to create a healthy working environment for market vendors and artisans.
The planned expenditure for the year as per the policy statement was Shs.4,600,000,000. However, only Shs.70,000,000 was budgeted for and approved by Parliament for the year under review representing 1.5% of the planned expenditure.
There is need for government to provide the necessary resources to complete these planned activities. It is not good practice to go into ventures that end up not being funded to completion.
12.5 Non Reconciliation of NTR Collections by URA The non-tax revenue collected by Uganda Revenue Authority on behalf of the Ministry was not properly reconciled with the Ministry records. A comparison between Monthly returns from URA and receipts issued by the Ministry for the same period shows that a total of Shs.75,467,700 was not receipted thus understating the NTR revenue by the same amount. The records should be properly reconciled and any differences properly investigated.
12.6 Lack of Approved Staff Structure The Ministry was granted its ministerial status in July 2006 with the vision of ‘Planned Productivity and Sustainable Use of Land Resources in the areas of Lands, Housing and Urban Development’. The Ministry carries its activities through the departments of Lands and Survey, Land Registration and Valuation, Physical Planning, Urban Development, Human Settlement and Building. However the following matters were noted:
• The Ministry has continued to operate without an approved staff structure by the Ministry of Public Service.
100 • Although the Department of Building was indicated in the Ministerial Policy Statement of 2006/07 by Parliament, it has not been incorporated in the interim structure. This could have affected delivery during the year.
The Accounting Officer explained that though a structure was approved by Cabinet in June 2007, this was not agreed to and a new compromise structure was developed. He further stated that consultations are going on with the Ministry of Public Service to have the compromise structure approved and implemented by the Ministry. It was also explained that the department of building had been removed and a new department of housing created.
I await for the finalisation of the process of having an approved structure for the Ministry that will enable it fulfil its mandate.
12.7 Board of Survey Fifteen (15) grounded vehicles were not declared to the Board of Survey on stores. The Board of Survey report on stores is silent on them.
The Accounting Officer was requested for an update on the progress made to have them boarded off.
13.0 WATER AND ENVIRONMENT
13.1 Excess Expenditure A total of Shs.2,583,020,491 was over spent on consumption of property, plant and equipments (fixed assets) as reflected in the appropriation account based on the nature of expenditure for services voted. No explanation was provided for the excess expenditure.
101 13.2 Gross Taxes Payments (i) Acknowledgement of Non resource taxes A total of Shs.2, 714,989,503 was paid to Uganda Revenue Authority as gross tax payments incurred by the Ministry during the year. However, no receipts to acknowledge the same by URA were availed for review. The Accounting Officer explained that there was no clear procedure on who was to retrieve receipts from URA after receiving payment from Accountant General.
(ii) Un authorised payment of domestic taxes Examination of a sample of payments on the gross tax account at bank of Uganda revealed that a sum of Shs.467,617,255 was paid on behalf of various private companies and non government organisations, in respect of domestic VAT on procurement of goods and services. An additional amount of Shs.125,522,954 was paid by the Ministry as taxes on goods imported by a construction company. However I was not provided with the authority under which the payments were made. Payment of taxes for unauthorised private companies has the effect of introducing unfair pricing advantage over the tax complaint companies.
13.3 Payroll (i) Un-authorized salary payments Salary payments of Shs.217, 903, 360 were made to students who had applied to join the Ministry for industrial training in various professional disciplines to further their skills. During audit examination, it was however noted that these payments are irregular as they lacked authority of Ministry of Public Service.
The Accounting officer explained that the staff trainees are taken on to enable them acquire some relevant experience after which they are sent to the districts to support the water and sanitation programs.
102 I have advised the Accounting Officer to have this policy regularised with the Ministry of Public Service.
(ii) Violation of public service regulations on personnel recruitment A review of a sample of Ministry payments to contract staff employees has revealed that the ministry recruited and paid Shs.93,088,870 to contract staff employees for jobs which were not advertised. There was no evidence of either internal or external job advertisement having been made. This is irregular as it contravenes Public Service regulations which emphasize competition for public service jobs.
In his reply the Accounting officer stated that during the time under review, proper procedures were not followed but have now been streamlined to comply with Public Service regulations.
I advised him to always follow the right procedures recommended by public service when recruiting staff. (iii) Recruitments without job requirements Some contract staff employees who did not meet necessary job requirements were recruited without following proper procedures. The admissions were made based on admission letters from Education Institutions. One of the jobs is at the level of a consultant with Joint Partnership Fund (JPF).
The Accounting officer explained that the JPF under which these people were recruited has its own recruitment procedures and refers to their staff as consultants.
I advised the Accounting Officer to regularize these appointments or have these employees’ services terminated.
103 (iv) Improper budgeting for NSSF (employer contribution) It was noted that the Ministry did not budget for the employers 10% contributions (212101) under the various projects where contract staff are employed. Instead the NSSF contribution is charged on the item for contract staff salaries. I find this irregular.
The Accounting officer promised to have this rectified in the new financial year.
13.4 Expenditure Outside the Budget During the audit for the year 2006/07 it was noted that some projects with bank accounts in Bank of Uganda were being operated by the Ministry. Funding to these projects comes directly from the donors to the project bank accounts in Bank of Uganda. However, they were not budgeted for and appropriated by parliament in the financial year under review as required by the law.
They include, Project name Donor Support for carbon finance IDA New partnership for Africa’s Global environment facility (GEF) development fund through its implementation agency UNDP Enabling Uganda phases I and II Development Biodiversity information data bases climate change UNDP El-Nino action plan UNDP Support to Ramsar Cop EU
104 In his response the Accounting officer explained that there are some donors who choose to fund projects directly through their accounts in Bank of Uganda without going through the national budget.
I explained to him that management should streamline the budgetary system so that all funds are budgeted for and appropriated by parliament.
13.5 Lack Of Approved Staff Structure The Ministry of Water and Environment was granted its ministerial status in July 2006 to promote and ensure rational and sustainable utilization, development, and effective management and safeguard of water and environment resources. To date the audit shows that although the Ministry had its structure approved by the Cabinet most of the posts have not been filled led to forcing the Ministry to engage contract staff in some positions.
The Accounting Officer explained that the process of filling the vacant posts had been initiated and interviews were to be held soon.
13.6 VAT Exemption on Water Works In January 2007, the ministry sought for clarification from Uganda Revenue Authority about VAT on water works, to which URA clarified that the Finance Act 2006 amended schedule II of the VAT Act, cap 349 by substituting for paragraph 1(aa) with the following; “the supply of feasibility studies, engineering designs and consultancy services and civil works related to roads and bridges construction and water works”.
This meant that for the case of water works the supply of feasibility studies, engineering design, consultancy services, and civil works related to water works is an exempt supply and therefore not vatable.
It also implied that VAT paid on all certificates issued before 1stJuly 2006 had to be accounted for. However by the time the clarification was issued 105 by Uganda Revenue Authority it was seven months into the financial year and many water works contracts had been signed earlier and as such the Ministry had been paying the contractors certificates VAT inclusive. It is not known how the VAT paid was subsequently recovered.
It was noted that most contractors especially those dealing in water works who incurred Input VAT on the materials used on the water works such as pipes, cement etc have responded by requesting the ministry to invoke clause 45.1 of the water works contracts which requires the project manager to adjust unit rates for the affected items of the contract. However, the Ministry has not come out to address the issue of price adjustments. The effect is that the out put VAT has been eliminated and the contractors have been made to suffer input VAT as final consumers. They complain that this has made them to incur losses and may impact on their ability to execute the agreed contracts.
The Accounting Officer explained that the Ministry has remained vigilant in ensuring that contractors deliver as per their contract terms until the issue is addressed.
13.7 Management of the Ministry Canteen The ministry owns a canteen within its headquarters in Luzira which is being operated privately. I have not been provided with the formal contract/agreement between the Ministry and the operator of the canteen and it’s not known whether the ministry receives any revenue from this canteen.
The Accounting Officer promised to finalise the contractual arrangement with the operator.
13.8 Payments to Suppliers not on the Pre-qualified lists In the financial year 2006/07 when the new Ministry of Water and Environment was created, the Ministry continued to use the approved 106 suppliers previously pre-qualified by the former Ministry of Water, Lands and Environment for the period 2005/06 to 2007/08.
However, it was noted that a total of Shs.41,373,105 was paid to various suppliers which were not on that approved list of the pre-qualified suppliers. The implication is that the pre-qualified suppliers are denied the opportunity of providing services even after going through the rigorous process of pre-qualification. The practice creates a risk of over-invoicing and procuring substandard goods.
The Accounting officer attributed this to the transitional problems the ministry faced at inception.
I have emphasised to him the need to have all procurements made from pre-qualified suppliers. Any departures from this requirement should be handled in accordance with the regulations.
13.9Procurement Plan and Budget It has been observed that the procurement unit had no procurement plan for the whole of the last financial year contrary to Sec.31 (f) of the PPDA Act 2003. This means that procurements were handled in an haphazard manner.
The Accounting Officer attributed this to inadequate staffing of the procurement unit. He explained that the procurement unit has since been reinforced by the appointment of a Principle Procurement Officer.
107 13.10Small Town Water Supply and Sanitation Project Funded by GOU and ADF; PROJECT ID NO.P-UG-E00-002 LOAN NO.2100150008849 AND GRANT NO.2100155003571
13.10.1Counterpart Contributions It was noted that although Government of Uganda budgeted to provide counterpart funds amounting to shs.1,536,000,000 during the financial year, only shs.1,280,000,000 was released leaving a shortfall of shs.256,000,000. This affects timely implementation of project activities.
Management explained that this was due to budgetary constraints caused by the preparations to host the Common Wealth Heads of Government Meeting (CHOGM) in Kampala in November, 2007.
13.10.2With holding Taxes It was noted that Shs.2,880,000 of whithholding tax was not deducted from a supplier.
In addition, remittances of Shs.1,231,162 effected to URA were not supported by receipts to enable confirmation of receipt of funds by URA.
According to section 136 of the Income Tax Act, non-deduction of withholding tax can attract interest and penalties.
Management explained that the payment for printing of IEC Materials was made without deducting the statutory 6% with holding tax in error and will be rectified by deducting funds from the VAT which has not yet been paid. A letter to the service provider informing them of this process and seeking their no objection is due to be written.
The remittances to URA that were made but the receipts not collected were due to an omission and the receipts were to be collected at once.
108 Management is advised to adhere to the requirements of the Tax law to avoid punitive action.
13.10.3General Standards of Accounting and Internal Control (i) Settlement of invoices It was noted that there were delays in settling the contractor’s invoices/interim certificates especially the Government of Uganda portion of the invoices. Accordingly, a total of Shs.2,568,331,735 remained outstanding/unsettled by the end of the financial year under review.
According to the conditions in the contract, delayed settlement of contractors’ invoices (beyond 28 days) makes it liable for payment of Interest to the contractor. This may result into unnecessary costs to the project.
Management explained that the delay to settle the Government of Uganda portion of the contractors’ invoices arose out of the lack of funds to the project from the Government of Uganda within the budget and that the Ministry was preparing a special request to Ministry of Finance to provide a supplementary budget to meet the contractual requirements of the project.
I have advised Management to expedite the process of settling the invoices to avoid litigation.
(ii) Advances Advances to project staff totalling to Shs.13,734,000 had not been accounted for by the time of audit in December 2007.
Delays in accounting for advances can lead to extension of the Project life leading to extra administrative costs. 109
Management explained that the accountabilities had not been filed by the time of audit but they undergoing authentication to the satisfaction of the Internal Auditor.
Management has been advised to ensure that accountabilities are always submitted promptly.
(iii) Procurement A review of the procurements undertaken by the project revealed that these were carried out in accordance with the bank procurement guidelines except for the following:-
(iv) Delayed Completion of contracts: It was noted that the following contracts had not yet been completed by the time of audit in November 2007, despite the fact that their contractual periods had expired:- Lot 2: Mityana expired on 3/7/07 Lot 2: Mpigi expired on 10/5/07 Lot 2: Kigumba expired on 6/5/07
Delays in completion of contracts can lead to failure by the project to accomplish all the planned activities within the project duration.
Management explained that the initial contract completion date was 03rd July 2007 but due to substantial delays caused by accessibility issues on some of the construction sites, an extension was authorised for the entire contract up to 17th October, 2007.
110 (v) Supervision Mission Recommendations The following AFDB Supervision Mission recommendations of 26th March-6th April, 2007 had not been implemented by the time of audit in November 2007:- • GoU to settle all outstanding balances to the contractors and submit a report on status of GoU contribution including the balance owed by 30/6/07.
• GoU to provide evidence of reimbursement of the ineligible payments made from the special accounts by 30th June 2007.
• GoU to submit to the bank a follow up report on the status of implementation of recommendations of the auditor by 15/5/07.
• GoU to complete the works according to respective contracts by 31st October 2007.
• GoU to replace the projects excel based accounting system with a specialised accounting software package.
There is laxity on the part of Management to implement agreed recommendations. This practice can lead to punitive action such as suspension of disbursements by the Bank.
Management is advised to ensure that all recommendations of the supervising Mission are implemented.
13.11Farm Income Enhancement and Forest Conservation Project; Project ID NO.P-UG-AAC-001; ADF LOAN NO. 2100150008296; ADF Grant NO.2100155003172; and NDF Credit No.441
13.11.1Project Financing According to the financing agreement, the project was supposed to be funded as follows:-
111 Source Amount (UA) Percentage AfDB loan 31,600,000 62 AfDB grant 9,900,000 19 Nordic Development Fund (NDF) 4,200,000 8 GoU 5,600,000 11 TOTAL 51,200,000 100
However, for the period under review, there was no contribution from the NDF. In addition, Government of Uganda only provided Ushs.130 million to the Agricultural Enterprises Development component and none to the other two components. This can affect timely implementation of project activities which may lead to Project extension and unnecessary administrative costs.
Management explained that due to limited funds allocated to the Ministry by Ministry of Finance Planning and Economic Development. The funds were allocated to the Agricultural Enterprise Development Component in the Ministry of Agriculture Animal Industry and Fisheries. For Nordic Development Fund, the conditions necessary before initial disbursement had been fulfilled.
13.11.2Lack of National Project Coordinator According to the conditions precedent to the first disbursement contained in Article five of the Financing Agreement it was a requirement that the National Project Coordinator (NPC) be recruited not later than 6 months after the first disbursement. However, the position of the NPC has not been filled. This implies that the vital roles of coordinating the activities of the two main components of the project, supervising the implementation of these activities and general administration of the whole project may not be effectively performed.
Management explained that the post of NPC could not be filled at the time because some of the candidates interviewed contested the results. The
112 concerned candidates referred their cases to both the PPDA and IGG. Investigations were carried out by the IGG. After review of the PPDA and IGG reports, the Bank recommended that the post be re-advertised and the position has now been re-advertised and interviews shall be held soon after the last date of submission of applications of 7/1/2008.
Management is advised to expedite the process of recruiting a Coordinator and ensure that the correct procedures are followed.
13.11.3Project Steering Committee: According to Article V of the financing Agreement, the project is supposed to have a steering committee which involves the Permanent Secretaries of the following Ministries: Ministry of Water and Environment, Ministry of Agriculture Animal Industries and Fisheries, Ministry of Finance, Planning and Economic Development, Ministry of Tourism, Trade and Industry, Ministry of Local Government, Ministry of Gender, Labour and Social Development and Office of the Prime Minister, with a member from Uganda National Farmers Federation. The Project steering Committee met only once as opposed to the required two meetings per annum. In addition, the Secretary to the steering committee who is supposed to be the National Project Coordinator (NPC) has not yet been recruited.
This implies that the project steering committee is not effectively giving policy guidelines to the project.
Management explained that the Steering Committee was expected to meet at least twice a year for among other things to approve recruitment and appointment of key staff, annual work plan and budgets and annual trainings to ensure that they are consistent with project objectives.
113 During the period under audit, the project activities were basically start up activities and that the Steering Committee shall be more active as project activities pick up in the next financial year.
Project Management should ensure that all the required meetings are held regularly.
13.11.4General Standards of Accounting and Internal Control (i) Book Keeping The following books of account were not being maintained contrary to the ADB/F book keeping guidelines:- • Currency register • Summary register • Contractors ledger
Management explained that financial management guidelines had been developed and shall guide the project on proper ADB financial management system including the establishment of the registers.
It is recommended that the guidelines be implemented without further delays.
(ii) Budget Management and Control It was observed that each component of the project prepares work plans/budgets and spends the funds as a separate entity. However, there are no vote books maintained to monitor how the budget allocations have been utilized. This implies that funds may be spent uncontrollably.
In addition there was no budget variance analysis carried out by the project to ascertain the extent of deviations from the budget as well as providing explanations for each major deviation.
114
Management explained that this was due to absence of proper financial guidelines at the time and that since then each of the components had established a vote book following the project financial management guidelines.
This will be verified in the subsequent audit.
(iii) Accounting and Operations Manual The Project does not have an accounting and operations manual. This implies that the various components have no uniform guidelines to refer to in their day to day operations and book keeping.
Management explained that this was a result of delayed recruitment process of the technical staff of the NPCU mandated to produce the guidelines, a process which was finalized only after 30/6/06. The accounting manual will be finalized in January 2008.
(iv) Supervision Mission Recommendations The following recommendations made during the supervision mission held between 16th–24th September 2007 have not yet been implemented by management:-
• National Project Coordinator be appointed expeditiously to reduce the impact of lack of the NPC on implementation achievements. • Production of District Accounting guidelines be finalized and put into use by December 2007. • A process of acquisition, installation and training for accounting software be concluded as soon as possible to enable the operationalisation before 1st December, 2007. • Insurance to all project vehicles that had been procured be expedited. 115 • Recruitment of a Watershed Management Advisor be made and completed by 15th November, 2007.
Management explained that they have made some progress in implementation of some of the recommendations.
Management is advised to ensure that all recommendations of the supervising Mission are implemented promptly.
13.11.5Forestry Component (i) Fuel Deposits It was noted that shs.12,000,000 was deposited in Standard Chartered Bank for Forestry coordinating Unit to facilitate execution of component activities. The fuel was allocated in the ratio 4:3:3:2 for Project Coordinator, Project Manager-Water-shade, Training and participating officer and Project Manager-Tree planting.
However, during that time there were no project motor vehicles for which the fuel would be used. Further more, no motor vehicle log sheets were availed for audit, thus the activity/ purpose of movement was rendered difficult to establish.
I was not able to establish whether funds were used for the intended purpose.
(ii) Repair of Motor Vehicles A sum of Shs.6,285,383 was spent on the repair of the following Motor vehicles: UG 1293 S, UG 1443 S, UG 1248 S and UG1442 S. However, these vehicles are not the property of FIEFOC Project.
Management explained that in the initial stages of the project start up phase, there were no project vehicles whereas preparatory work
116 had to be done .The officers designated to the project were using vehicles from the Forestry Inspection Division for project supervisory and preparation work pending the procurement of the project vehicles. Such vehicles had to be fuelled and maintained.
(iii) Fixed assets management • Although the forest Component opened a fixed asset register, it was noted that the register was not kept up to date. For instance vehicles UG 1480 S and UG 1481S Pajero were not recorded in the assets register. It was further noted that the same furniture procured by the component had not been engraved at the time of audit.
It was also noted that in the agriculture component all assets procured (9 vehicles and assorted office furniture and equipment) had neither been recorded in the register nor engraved. The fixed asset registers for Agricultural enterprise development and NPCU were not availed for audit.
In the absence of a complete fixed asset register, it becomes difficult to verify the existence and monitoring of project assets.
Management explained that the furniture was not yet engraved at the time of the audit because the procurement process for securing a firm to engrave the assets was still underway. The vehicles have now been entered in the asset register and furniture will be engraved.
13.12Joint Partnership Fund
13.12.1Government of Uganda Counterpart Contribution It was noted that Government of Uganda has not fulfilled its obligation to contribute towards the project by way of Tax refunding. As at the year end,
117 there was a high cumulative outstanding VAT amount of Ug.Shs.2.3 billion. This implies that the programme may not obtain value for money on the VAT tied up on the various expenditures incurred.
The accounting officer has indicated that the matter has been raised with the Ministry of Finance, Planning and Economic Development.
13.13Water and Sanitation Development Sanitation Development Facility – South Western Branch (ADA:1709-00/2005, EU:236A & GOU:0160)
(i) Operations Manual It was noted that the program does not have an operations manual. In the absence of an operations manual, program staff and other implementing agencies (e.g. the districts) have no guidance to follow while executing their duties.
This was caused by the delay in procurement of the consultancy that is supposed to prepare the manual. He promised that the Operational Manual for the Project will be available within the next three months.
(ii) Status of Program Implementation There were delays in release of funds from the Joint Partnership Fund (JPF) account. Funds for the first quarter (July-September 2006) were received at the end of September 2006 whereas funds for the second quarter (October-December 2006) were received in January 2007.
This implies that the activities are not implemented on schedule and according to work-plan. This can lead to extending the Project life and extra administrative costs.
Management attributed the delay to the Project Management Committee (PMC) which has to first approve the Work plans and reports before funds 118 can be transferred to the project account. It was explained that for the particular quarter, the PMC did not sit on schedule and that the problem had been acknowledged by the Ministry and modalities were being planned to minimize the delays.
14.0 EDUCATION AND SPORTS
14.1 Extra Budgetary Financing
Under the provisions of the constitution, all expenditure must be approved in the Appropriation Act. However, examination of project records revealed that some programmes were being run outside the approved budget for the ministry. These include the following:
Project 30thJune account balance (Shs) SESEMAT project 968,520,880 Development of Human resources project 848,530,733 Uganda and Norwegian schools cooperation 671,565 IDA energy for rural transformation A/C 94,907,526 213.213032.1 3,362,219 213.213029.1 Common wealth association of learning. 3,754,149 Sports development fund
There is a risk that duplicate activities may be undertaken.
The Accounting Officer has explained that no duplicate activities are undertaken and that all activities undertaken through this mode of financing are not reflected under the work plans for the main stream estimates of the Ministry.
The Accounting Officer should further streamline the operations of the Projects to ensure that all projects under the Ministry are budgeted for, appropriated by Parliament and disclosed in the Financial Statements.
119 14.2 Tax Expenditure Not Budgeted for The Ministry incurred taxes amounting to shs.2,223,959,178 during the year. The amount was paid to URA by Treasury on behalf of the Ministry through gross tax settlement system. The Ministry has recognised this as expenditure in the Statement of financial performance. However, this Tax expenditure had not been budgeted for by the Ministry and is therefore extra budgetary. It is not clear why Treasury deviated from the existing procedures relating to settlement of taxes under the Gross Tax Payment System.
14.3 Undisclosed Cash Balances
The Ministry has projects which operate outside the Integrated Financial management System (IFMS). At the end of the financial year, the project balances totalling Shs.9,911,668,898 were not consolidated in the Ministry accounts nor was there any disclosure to that effect.
In his written reply the Accounting Officer stated that he is waiting for further guidelines from the Accountant General on the issue. I await final proper consolidation of Project activities in Ministry statements.
14.4 Interest on Unpaid Tax
During the year under review, Shs.33,967,506 was paid to a clearing firm in two instalments in respect of interest on un paid tax on goods donated to schools under the humanitarian Assistance Programme. The interest was arrived at after a legal mediation by the Solicitor general and subsequently, a consent judgment was drafted.
However, the company is not a withholding agent and therefore it was irregular for the Ministry to pay interest on unpaid tax directly to the company. Instead the amount should have been remitted to URA. At the time of audit, there was no evidence that the interest was later remitted to URA as required. 120
The inability by the Ministry to meet its obligation of paying the tax well aware of the repercussions led to the nugatory expenditure.
In his reply the accounting officer explained that this was a court ruling to which he had to comply.
14.5 Easy learning cards project
A total of 35,000 easy learning cards under the easy learning Project were purchased in July 2005 at a cost of USD 175,000 and handed to a consultant. Over the period, 7024 cards were sold and Shs.63,216,000 was raised from the sales at a unit cost of Shs.9,000. I was not provided with accountability for the monies collected.
(i) Unutilized card balances:
27,976 cards costing USD 139,880 and expected to realise Shs.335,712,000 were still in stock at the time of audit. In the event that no call center is opened and therefore operational, there is a possibility of loss on the side of government.
(ii) Project Management
It appears that there is lack of interest in the entire project because out of an expected budget out turn of USD 3,200,000 only USD 175,000 has been released. This represents a percentage of only 5.5% of money released for the Project.
I recommended that a review of the entire project should be made with a view of addressing all the issues identified. The monies so far collected from the sales by the consultant should be accounted for.
121 14.6 Non-Remittance of WHT
Section 120 (1) of the Income Tax Act requires the Ministry to withhold tax on any payment exceeding Shs.1,000,000. Accordingly, the Ministry with held Shs.70,687,942 from payments made to its suppliers and contractors. The payments were made through opening letters of credit with various commercial banks.
However, the withheld amount was not remitted to URA within 15 days after end of month as required under Section 124 (1) of the Income Tax Act.
The inability to remit the funds denies Government access to these funds to finance other important activities.
During discussions, the accounting officer produced documentation instructing Bank of Uganda to remit the monies to URA. However, at the time of the report there was no evidence that the remittance was actually done.
14.7 Inspections on Educational Institutions
During the period under review inspections of a sample of education institutions was carried out and the findings are indicated below:-
(i) Staffing
It was noted that a number of the institutions inspected had inadequate number of staff and some of the staff did not have their appointment regularised. This was noted especially in the transferred institutions.
In his reply, the accounting officer explained that the ministry had made submissions for recruitment of staff of Health training institutions to the Education Service Commission totalling 267.
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I await for the response from the Education Service Commission.
(ii) Non deduction of WHT Contrary to the tax regulations, a number of institutions were not deducting with holding tax. Non compliance with tax requirements denies Government revenue to implement important activities.
Details are as below.
Institution Gross total WHT lost amount 1 Mulago school of Nursing and 729,282,050 43,756,923 Midwifery 2 Butabika School of Psychiatric 21,013,700 1,260,822 Nursing 3 Bishop Willis Core PTC Iganga 43,544,160 2,612,650 4 Paidha PTC 33,590,600 2,015,436 5 Arua Core PTC 76,928,800 4,615,728 6 St.John Bosco lodonga 62,723,650 3,763,419 7 Jinja School of Nursing and 202,790,530 12,167,432 Midwifery
I recommend that the provisions of the tax law be complied with.
(a) Mulago School of Comprehensive Nursing and Midwifery
(i) Staffing
It was noted that 27 teaching staff who had been appointed by MOH , did not have their appointment regularized by MOES by time of audit .Six non teaching staff including the school bursar had no appointment letters from MOES. This is potentially dangerous and risky especially for the bursar who is entrusted with a lot of government funds.
In his reply the accounting officer agreed with the observation and stated that the issue was being handled by the relevant department.
123 (ii) Procurements: Shs.729,282,050
During the period under review, the school procured supplies worth Shs.729,282,050 from various suppliers. However, it was noted that the supplies were not procured through competitive bidding as no award letters or contracts were provided for audit review. As such, I could not confirm whether, there was value for money achieved in these transactions.
(b) Butabika School of Psychiatric Nursing
The school was founded 40 years ago with the mandate to train competent mental health professionals for Uganda and the great lakes region.
(i) Accommodation
Where as the school is housed in new buildings, accommodation is still inadequate which has resulted into sharing of class rooms with another independent institution on the same compound. The school also lacks adequate accommodation for its staff.
(ii) Lack of a sick bay
Despite the fact that the school is for boarding only, there is no sick bay to offer first aid to students. This puts student lives at risk in case of emergencies.
(iii) Book keeping
The books of account were not up-to-date. The cash analysis book was opened in December 2006. All transactions for the period July 2006 to November 2006 were not recorded any where.
(iv) Stores records
The stores records were not up to date therefore I could not perform, a stock check.
124 (v) Chaining of payments
As a requirement, all payments exceeding one million should be subjected to with holding tax. However, it was noted that the school breaks down payments to amounts below the threshhold for WHT purposely to avoid the requirement. For instance, shs.6,213,000 was paid to M/s Masha General merchandise ltd for supply of food stuffs using seven cheques all issued on 28th February 2007.Also, Shs.3,962,500 was paid to the same firm on 18th December 2006 using four cheques. This practice denies government funds to implement important activities and also leads to wastage of cash stationery.
In his reply, the accounting officer explained that he had instructed the Principal to ask the firm to process and have WHT deducted. At the time of the report, there was no evidence that this had been done.
(c) Jinja PTC
The school has a total student enrolment of 319 who are all government sponsored with a staff strength of 27 ( 13 tutors ,3 non teaching and 7 support staff).
The school lacks transport as the school lorry (UCD 876) has been grounded for over 2 years.
(i) Accommodation
The College is housed in dilapidated buildings shared with a primary school. There is no dinning room for the students and food is taken while standing. The bursar’s office is extremely dirty, dusty and besides water percolates through the ceiling hence soiling accounting documents. Given the government regulations which require that documents be kept for a specific period, it is unlikely
125 that the manner in which the records are kept will permit future reference if need arises.
(ii) Book keeping
Stores records availed for review were not up to date .The stores book for receipts and issues of beans was found to have been last up dated on 2/05/05.
(iii) Compliance with PPDA requirements
The college had no pre-qualified suppliers and all purchases were being made by a one M/s Takoba Rose the college caterer on a cash basis. Given that this person is also responsible for maintaining the stores records with almost no supervision, the stores records cannot be relied upon and cases of abuse and mismanagement of resources cannot be ruled out.
I recommended that duties regarding maintenance and purchases of records be segregated. Cash purchases should be restricted to emergencies. The college administration should also ensure total compliance with the procurement regulations.
(d) Bishop Willis Core PTC- Iganga
The school started as a theological college in the early 1920s by COU. Through a series of up grading, the school is one of the original core 23 PTCs in the country located 800 meters off the Jinja –Tororo high way. The following was observed from the audit inspection carried out at the school.
(i) Farm
The college runs a farm which was opened with assistance from ADB. However, there is no farm manager to manage the activities of the farm. Given the already staffing problems at the school, it is important that a manager is recruited as soon as possible. 126
In his written response the accounting officer explained that he had instructed the Principal to identify and hire a person with relevant qualifications to temporarily manage the farm as he awaits for ESC to recruit.
(ii) Sick bay
The school has no substantive nurse at the school which has led management to locally recruit against normal procedures. Where as, the school has 14 blind students, there is lack of a tutor in Braille.
The Accounting Officer explained that the regularization/validation and recruitment of non teaching and support staff exercise done in 2003 did not give the department all the required staff while some personnel presented failed the interviews. He further indicated that this would be taken seriously to ensure proper recruitment.
(iii) Laboratory block
There is no laboratory technician at the school but a laboratory tutor currently carries out the responsibility for the lab. Also, there was no record of items issued to the College by the Ministry.
(e) National meteorological training school
The school was started in 1990 under the department of meteorology in the then Ministry of natural resources to train medium meteorologist. It was transferred to MOES in 1998 with current entrants of 43 students.
The inspection revealed the following:
127 (i) Staffing The school has an acute staffing problem with no substantively appointed lecturers. Reliance is attached to part time lecturers who come in and go at will.
(ii) Accommodation There is inadequate accommodation for both students and the staff. Students are housed in a dilapidated and bat infested structures which require urgent renovations.
There is no laboratory for the science equipment, no kitchen nor a student hostel.
(iii) Transport
The school has no means of transport with only a now grounded Daewoo car registration number UG 0061S inherited from the then Ministry of natural resources.
(iv) Book keeping
The cash book presented for audit was very untidy with a lot of white wash. The cash book was not maintained professionally.
(v) Funds not accounted for; Shs.118,485,702.
The school received shs.118,485,702 from Ministry of Education and Sports in respect of capitation grants and other activities. However, accountability documents were not provided for audit review. The details of the expenditure are shown below:-
Cheque Date Purpose Amount
984088 9.8.06 Capitation grant July to Sept. 6,176,250
533333 15.11.06 Capitation grant Oct _ Dec 6,176,250
128 60207 5.12.06 Training equipments, instruments, 48,755,000 furniture and fencing
68100 8.2.07 Capitation grant Jan to March 6,176,250
143955 30.5.07 Capitation grant April to June 6,176,250
150913 21.6.07 Payment for exams and 5,025,702 monitoring
990915 25.8.07 Assorted renovations 40,000,000
TOTAL 118,485,702
I recommend that the Ministry reviews the staffing, accommodation and transport issues identified above. The PTC should also provide accountability for the unaccounted for funds.
(f) Nakawa VTI
The school started in 1971 with assistance from government of Japan with the objective of retraining workers from various industries. The school gets assistance from JICA. It has a current student enrollment of 560 of which only 60 are GOU sponsored. The audit inspection exercise revealed the following:
(i) Staffing
The school is inadequately staffed with only 25 out of the approved staff structure of 46 positions filled.
(ii) Staff advances: Shs.7,000,000
Shs.7,000,000 advanced to staff remained un accounted for at the time of audit. Further more, contrary to financial regulations, no advance ledger was being maintained at the institute. In absence of an advance ledger, it becomes difficult to monitor the movement of advances.
129 (iii) Missing vouchers
Payment vouchers totalling to Shs.61,251,100 were missing and therefore not availed for audit examination. I was not provided with the explanation for the missing documents.
(iv) Un accounted for funds
A total of Shs.93,289,000 paid from two cheques (990946 Shs.43,089,000 dated 25.8.06 for assorted renovations and 060714 of Shs.50,200,000 dated 12.12.06 for training) remained un accounted for at the time of audit. Delays in accounting for funds may lead to falsification of documents.
The Ministry is advised to review the staffing problem in the Ministry. In addition the Institute should provide supporting documentation related to unaccounted for funds.
(g) Paidha PTC
Paidha PTC was established in 1982 as a Government founded grade 11 Teacher training college. In 1985 it was upgraded to a grade 11 TTC. It is located at Alisi Village in Paidha Town Council on 80.9 hectares piece of land.
It has a current student enrollment of 360 government sponsored students.
(i) Physical Structures of the School
• Boys dormitories consist of mud and wattle structures
• Teacher’s houses are grass thatched mud and wattle structure
• A grass thatched mad wattle structure serves as the kitchen, there is no dining hall, and students are served food in the open.
• There is only one 4 – classroom block accommodating all the 360 students.
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• A multipurpose hall that collapsed in 2006 has not been replaced to date. Instead a temporary structure with reeds and tarpaulin roof has been erected as a replacement.
• The staffroom consists of a make-shift wooden structure.
• Administration block is in a very dilapidated state.
• A library block constructed by GQ Investments at a total cost of Shs. 152,716,684= and handed over on 29.6.2007 has its floors cracking by the time of the inspection. • The girl’s dormitory though in a better state, lacked beds and as such girls sleep on the floor.
• The college lacks electricity for lighting.
• It was also noted that people who were compensated in October, 2001 have re-encroached on the college land.
In addition, I was not availed a copy of the land title, as such I could not establish the ownership status of the land.
(b) Book-Keeping
(i) Stores
It was noted that record keeping in stores was very poor. There were no stock-cards and stores ledgers availed for audit. Receipts into and issues from stores were not recorded anywhere. Science equipment and chemicals received from the Ministry on 10.2.2007 had not been recorded in stores ledgers by the time of inspection. As such I could not confirm whether the quantities issued to the college were actually received and put to good use. The store appeared disorganized with items scattered all over. The person working as store-keeper was a grade 5 teacher without any store-keeping background or training.
131 (ii) Books of Account
Similarly, it was also noted that the book keeping in accounts was poor. Monthly bank reconciliations were not being done. For example from the month of September 2006 up to the end of the financial year i.e. 30.6.2007 no bank reconciliation had been done contrary to S.345 of the Treasury Accounting Instructions 2003.Receipts and payments for the months of May and June 2007 had not been posted in the cashbook at the time of audit. Paid vouchers were not cancelled with ‘PAID’ stamp.
(iv) Procurement – Shs.33,590,60
It was also noted that during the period under review, the college paid out a total of Shs.33,590,600 in cash to different suppliers for different items procured by the college contrary to financial regulations. There is a risk that Value for Money may not have been achieved.
I recommend that the Ministry should review the state of facilities in the College and come up with an Action Plan to address the issues. The College is advised to ensure that record keeping at the stores and books of account is done in accordance with the TAI. The College is further advised to adhere to the provisions of the Income Tax Act and PPDA.
(h) Arua Core PTC
Arua Core PT started as a school for training clergymen by the Inland Mission for Africa under the Anglican Church missionaries in 1946. Between 1946 and 1960 it changed to training vernacular teachers. In 1962 it was elevated to a grade 11 teaching training college and again to a grade 111 TTC in 1986 and in 1997, it became a Core PTC. It has a current enrollment of 450 students. An audit inspection carried out on 3.7.2007 revealed the following:-
132 (a) Facilities in the College
• The college suffers from persistent power failure due to old underground cables that cause short circuits once it rains. • The science laboratory block lacks basic facilities for a science laboratory. • The kitchen is in such a dilapidated state that it may collapse anytime.
(b) Book-keeping
(i) Stores
It was noted that the record keeping in stores was inadequate. Items were not entered in the stores ledgers. For example, the following items valued at Shs.7,097,600 procured on various dates were not entered in the stores ledgers.
Date of Item Quantity Unit price Amount delivery 4.12.06 Posho 1062 kgs 800 849,600= -do- Cassava 1061 kgs 500 531,000= flour -do- Rice 672 kgs 1500 1,008,000= -do- Sugar 320 kgs 1800 576,000= -do- Cooking oil 40 ltrs 2250 90,000= 16.1.07 Tyres 4 pcs 270,000 1,080,000= 16.4.07 Cassava 300 kgs 450 135,000= flour -do- Salt 2 bags 9000 18,000= -do- Cooking oil 20 ltres 2,250 45,000= -do- Onions 1 basin 15,000 15,000= 20.3.07 Rice 500 kgs 1600 800,000= -do- Fish enkejje 1 sack 120,000 120,000= 20.2.07 Rice 500 kgs 1500 750,000= 28.9.06 Tyres 4 pcs 270,000 1,080,000= 7,097,600=
In absence of proper store ledgers, it becomes difficult to monitor movement of items procured and also exposes the stores to misuse.
133 (iii) Wasteful Expenditure – Shs.14,535,000
A sum of Shs.14,535,000= was paid to an individual for emptying of College pit latrine between August 2006 and March 2007.
I consider this expenditure wasteful due to the amounts involved in this activity and also reflects poor planning on the part of management as this amount could instead have been used for construction of a new pit latrine(s). Whereas the emptying could have been allowed on an emergency basis, the continued exercise cannot be justified because it weakens the physical structure of the latrine and ultimately putting student lives at risk.
(iv) Uniform/ICT Account
The College operates a uniform/ICT Account No. 0140091548001 with Stanbic Bank Arua Branch into which proceeds from sale of uniforms to students and ICT charges paid by students are deposited. A copy of the bank statement availed for audit revealed that the account had a credit balance of Shs.44,980,273 as at 31.5.2007.
I could not ascertain the operations of this account as no cashbook and payment vouchers were available for audit.
I recommend that the Ministry reviews the state of facilities in the College and come up with an Action Plan to address the issues. The PTC Management should improve on its store-keeping and also avail this Office with supporting documents for the uniform/ICT account.
(i) St. John Bosco Lodonga
St. John Bosco Core PTC started in 1945 as a grade 1 Teacher Training College for boys by the Roman Catholic Fathers. Admission of girls started
134 in 1990. It was up graded to a Core PTC in 2001. It has a current enrolment of 451 students. An audit inspection carried out at the college on 5.7.2007 revealed the following observations:-
(a) College Facilities
• Staff houses are in dilapidated state and need serious renovations.
• There is no electricity as such a lot of money is spent on the old generator that is used for lighting the college.
• 12 solar panels with 9 batteries installed by Roko to help alleviate this problem cannot serve the entire college. It only services the computer laboratory for 1 – 2 hours. Besides one of the inverters that blew on 6.2.2006 had not been replaced by the time of audit despite the fact that Roko was notified about this.
• The college truck is in a dangerous mechanical condition and breaks down quite often.
• A firewood kitchen that is under construction by Zebra Associates is too small for the purpose and appears badly designed.
(b) Book-keeping
(i) Stores
It was noted that record keeping at the College store was poor. There was no store ledger presented for audit inspection in the science laboratory. As such science equipment and chemicals dispatched on 8.2.2006 from Ministry stores could not be traced in the college records. I could therefore not confirm receipt of these items and how they were being used.
135
Similarly, in the general stores, record keeping was not in any way better. Ledgers were not well maintained. A sample of items worth Shs.8,902,483 procured on different dates could not be traced to the stores ledgers therefore casting doubt as to whether they were actually procured and received into the store for the benefit of the college community as a whole.
(ii) Cash purchases
A total of Shs.62,723,650 was paid out in cash to various suppliers and service providers during the year contrary to Treasury Accounting Instructions.
It was further noted that these suppliers and service providers were not selected through competitive bidding contrary to PPDA Regulations.
(iii) College Truck – Shs. 31,000,000
The college procured an old truck a Mitsubishi canter 1991 model, registration number UAH 226R at a cost of Shs.31,000,000 on 2 October 2006 from an individual. This procurement was conducted contrary to the PPDA guidelines. I could not therefore ascertain whether value-for-money had been obtained. This purchase is also a violation of government policy of not procuring old motor vehicles. In the absence of express authority for this transaction, the expenditure be disallowed as a charge on the consolidated fund. Besides, I could not identify the source of funding for this capital expenditure as the college only receives grant for recurrent expenditure from the Ministry.
136 (iv) Funds Not Accounted For Shs.22,101,500
A sum of Shs.22,101,500 paid out for various activities had not been accounted for by the time of writing this report. This is irregular and the funds should be accounted for else recovery measures be taken.
(v) Missing vouchers: Shs.21,432,000
Payment voucher involving expenditure totalling Shs.21,432,000 were found missing. This could be a result of poor record keeping or an attempt to hide audit evidence. The records should be availed for audit review. Details as under:
I recommend that the Ministry reviews the state of facilities in the College with a view of coming up with an action plan to address them. The College should desist from making a lot of cash purchases and ensure that funds not accounted for are accounted for and documentation provided to this office.
(j) Arua Technical Institute- Ragem
Arua Technical Institute started as Uganda Technical Institute – Ombaci in 1985. In 1987 was closed by the Government. After an appeal by the Community, it was reopened in 1990 with assistance from British American Tobacco BAT (U) Ltd.
It has a current enrolment of 220 students. An inspection carried out at the Institute on 6.7.2007 revealed that:-
There is lack of a girl’s dormitory which has adversely affected enrolment as there are only 20 girls enrolled at the Institute. There is also acute staffing problem. Out of the 15 teaching staff at the Institute only 8 are formally appointed and are on payroll while the rest have never been appointed.
137 However, it was noted that the Bursar had kept proper books, keeping accounting records up to date and well organized.
(k) Canon Lawrence PTC
The PTC hired an audit firm Ms ABOMAL to conduct an audit. An examination revealed that Shs.1,400,000 had so far been paid to the firm in respect of audit fees and audit expenses. This is contrary to section 91 of the Universities and other tertiary institutions Act which mandates the OAG to conduct the audit or to appoint the auditor. It was also noted that the format of accounts is not in accordance with the TAIs.
It is recommended that the monies paid out to the audit firm be disallowed as a charge on the consolidated account. The accounting staff need to be sensitized on the format of the GOU accounts.
14.8 Support to the Education Strategic Investment Plan (ADB Education II Project), ADF Loan No.F/UGA/PL/1AZ/2001/4 and Grant No. F/UGA/GA/1AZ/2001/4
14.8.1Unaccounted for Funds The following districts had outstanding balances unaccounted for at the time of audit in December as shown below:- District Amount (Shs.) Apac 17,692,061 Kanungu 6,614,442 Kiboga 36,798,663 Kitgum 22,405,748 Masaka 5,737,578 Moroto 1,787,273 Nakapiripirit 2,116,523 Palliisa 2,913,186 Tororo 24,959,229 Wakiso 10,611,419 Total 131,636,122
Delays in accounting for funds may lead to falsification of documents.
138 Management explained that according to School Facilities Guidelines for construction of Primary School Building Program component of the Project, contracts awarded under this component should provide for a defects liability period of six (6No.) months before final retention is paid for. The above funds were retention funds not paid to the contractors due to this clause stated in the contracts. Therefore by the time of carrying of this audit the defects liability period had not expired resulting into these funds being not accounted for by the stated Districts.
Management should make a follow-up of the accountability.
14.8.2Supervision Mission Recommendations According to the ADB supervision mission of 11-25 June 07, the following recommendations were to be implemented by Management:- Recommendation To be implemented by 1 Defective equipment supplied to STEPU 31st July 2007 and the undelivered equipment (i.e. 2 circular saws and 1 power hacksaw) to be replaced by the supplier
2 Proposal for using the grant balance of 31st July 07 uncommitted funds
3 Adequate accounting for funds September 2007 advanced to districts and include detailed usage of the ADF resources advanced to the SFG component in 2006/7 audit report
4 Liquidated damages to be deducted September 2007 from supplier of Lab Equipment and chemicals supply out of the retention of USD.117,442.10.
139 It was noted that the above recommendations were not addressed. This can imply that management does not take seriously supervision mission recommendations.
15.0 HEALTH
15.1 Nugatory expenditure
A construction company was paid a total of Shs.3, 822,558,930 during the year in settlement of outstanding bills of Shs.5,823,231,755. Included in the payment was a total of Shs.2,160,390,970 and US $798,232 in respect of interest charged on delayed settlement of outstanding certificates that were not paid for a long time. This interest component is considered as nugatory expenditure as it could have been avoided if the outstanding certificates had been paid in time.
It was also noted that these particular arrears were not disclosed in the previous years’ financial statements. Work certificates authenticating the amount were also not presented for audit.
The Accounting Officer promised to avail the supporting documentation.
15.2 Cash and Cash Equivalent
Under note 20 to the financial statements, the cash and cash equivalents balance is reported as Shs.2,992,929,702. This is composed of balances on revenue accounts of Shs.12,554,403; expenditure account Shs.2,892,939,433; and other accounts Shs.87,435,866. The bank reconciliation prepared in support of the balance on expenditure accounts still shows stale cheques to the tune of Shs.338,335,991 for financial years 2003/04, 2004/05 and 2005/06. It is not known why they have remained unpresented for such a long time. The Reconciliation also has unexplained debits of Shs.198,492,370in the cash book for 2004/05 which have not yet been investigated. 140
I have advised management to investigate all outstanding items in the reconciliation.
15.3 Un-appropriated Funding
The Ministry implements a number of projects which are not reflected in its budget. A sample of such projects is here below;
Project Name USD($) UGX(SHS) Account No Status 1. National TB & Leprosy 936.00 214.214026.1 Outside Program Budget 2.” 2,181,525 214.214027.1 “ 3. Medicinal Plants & 33,883 214.214033.1 “ Biodiversity 4. Network in medicinal plants 36,789.97 214.214059.1 “ & Traditional medicines 5. “ 204,060 214.214060.1 5. Uganda Virus research 2,572.11 214.214063.1 “ projects 6. “ 9,576,237 214.214064.1 “ 7. Medical Plants & Bio 113.38 214.214032.1 “ diversity 8. MPAMBA-NKUSI 1,879,841 214.214029.1 “ 9. TB Resaerch program fund 20,592,500 214.214051.1 “ 10. MOH/ CDC-HIV-AIDS 106,878.00 214.214044.1 “ 11. “ 9,843,274 214.214048.1 “ 12. Highland Malaria project 37,124.00 214.214045.1 “
Policies and Procedures for sourcing for donor funded projects in the ministry are not documented.
Projects that operate outside the Ministry budget lead to extra budgetary expenditure which is considered irregular. They create a risk of duplication in funding of similar activities and projects running for several years without being subjected to proper monitoring. 141
The Accounting Officer explained that the Ministry was in the process of streamlining the operations of projects in the Ministry and in the process all the projects will be captured in the budget and reported in the financial statements.
15.4 Outstanding Advances Regulations require that all advances be accounted for by the end of the financial year to which they relate. Contrary to these regulations, the Ministry did not account for administrative advances to staff totaling to Shs.774,027,753.
The Accounting Officer explained that advances are accounted for at different times and the figure is adjusted accordingly and that all measures have been put in place to retire all accountabilities for advances in time.
I await results of the mentioned measures
15.5 Borrowings Management borrowed a total of Shs.1.8bn from DISP Project, in order to open the Letter of Credit in favour of a company that was contracted to equip health centres under the ORET project. At the year end, the amount had not yet been refunded by the Ministry.
Project borrowings should be discouraged as they impede timely implementation of project activities.
The Accounting Officer attributed it to inadequate funding.
15.6 Diversions of funds Examination of accounts for the ministry for the period under review revealed diversion of funds totalling Shs.410,605,015 to cater for travel 142 abroad. Most of the funds were diverted without authority from other items especially item 224001-Medical Supplies (Drugs). Whereas the Ministry’s budgeted amount for travel abroad was Shs.175,883,000, sampled payments in respect of travel abroad amounted to Shs.410,605,015.
Furthermore, some payments lacked Prime Minister’s Office clearance and were not supported with used air ticket coupons as evidence of travel.
The Accounting Officer is advised to strengthen control over expenditure on travel abroad. Where additional funding is required reallocations or Virements should be sought in accordance with the financial regulations.
15.7 Outstanding Invoices for 3rd Party Procurements and Distribution
National Medical Stores invoiced the Ministry a total of 159,767,195 as distribution charges for donated drugs for Reproductive Health. In the absence of all the supporting documentation, I was not able to confirm that the bill was a proper charge to the Ministry.
It was also noted that the Ministry of Health is not aware of the funders of these drugs or the stocks in stores at the National Medical Stores. The donors deliver the drugs directly to National Medical Stores without liaising with the Ministry. There appears to be no proper coordination of the drug programme between the Ministry and National Medical Stores.
Besides, there are no policy guidelines that govern drug donations. Such guidelines would specify the type, quantity and shelf life of drugs acceptable to the Health Sector. Unplanned donations sometimes lead to large donations which may not be easily absorbed. This can lead to expiry of drugs.
143 I have advised the Ministry to put in place proper control systems that allow proper tracking and monitoring of all 3rd party procurements and distribution. There is also need for policy guidelines for drug donations to regulate and restrict entry of certain drugs that may be considered harmful.
The Accounting Officer explained that the Ministry has developed a three year rolling procurement plan for essential medicines and health supplies under which 3rd party procurements will be streamlined.
15.8 Rehabilitation of Entebbe Laboratory
Payment of Shs.50,102,000 was made to Bank of Uganda on 30th June, 2007 for rehabilitation of the measles laboratory at the Uganda Virus Research Institute (UVRI) institute in Entebbe. However the request made by the Director, UVRI revealed there were no works being carried out at the institute at the time. There were no bills of quantities and even the bidding process had also not yet been carried out.
The Accounting Officer explained that due to the dire need to rehabilitate the Measles Laboratory at UVRI, the money was transferred to a project account in Bank of Uganda before the year end pending the completion of the ongoing procurement of works. I have explained to her that the funds should have been remitted back to the Uganda Consolidated Fund and the activity budgeted for again in the new financial year. The Accounting Officer has also been requested for an update on the progress of work.
15.9 Security For Inventories Regulations on public stores require secure facilities to be provided for the safe custody of inventories and valuables in all Government premises in which such inventories are received and retained either temporarily or permanently.
144 However, the Ministry has several storage facilities which are not functional. Inventories received are not retained either temporarily or permanently in these facilities. They are distributed immediately or delivered directly to the recipients who do not reside in the Ministry of Health Headquarters. The available space referred to as a store has only banners for health promotion. The stores ledger presented for audit was found to be incomplete. It does not provide sufficient details on receipts and issues to allow proper verification. Furthermore it does not comply with the stores ledger folio as described in the TAI. Inadequate accounting procedures for inventories expose the Ministry to the risk of theft and loss of inventory.
The Accounting Officer attributed the lapse in stores management to lack of a qualified Store Keeper. She explained that although the two approved posts of Senior Stores Assistant and Stores Assistant have been declared to the Health Service Commission, they are yet to be filled.
15.10 Irregular Employment of Staff
Article 172 of the constitution of the Republic of Uganda requires that Persons holding or acting in any Office in the Public Office of Uganda should have been appointed by the appropriate authority.
It was noted that there were an estimated two hundred people employed at the Ministry Headquarters whose status of employment in the Ministry was not clear. A list of these people shows their status as either ‘personnel on contract, temporary appointment, no status of appointment at all or volunteers. During the year a total of shs 448,753,866 was paid to several of them as allowances. Although the number of such people is reported to have been reduced to ninety, their existence in the first place shows weaknesses in the Ministry’s human resource recruitment procedures.
145 The Accounting Officer attributed the recruitment/engagement of such personnel to staffing gaps in the Ministry. She explained that the Ministry was in the process of having a new structure to address the existing staffing gaps. In the time being the Ministry is to seek authority from Ministry of Public Service to allow them retain the volunteers. This was yet to be done by the time of writing this report.
15.11 Non Bonding of staff under Human Resource Development
The Ministry has a three year strategic plan to develop the health work force with the support of the development partners and financing from Government. This is to be achieved through various capacity development programmes. Through these programmes various staff are being trained in various Training Institutions. It was however noted that the Ministry does not enter into bonding agreements with staff who are sponsored.
For a sample of sixty three people that have been sponsored for training only two bonding agreements were availed for review. The Ministry is at risk of losing staff who have been trained.
Although the Accounting Officer indicated that all staff who had proceeded on training without signing bonding agreements were being called upon to do so, no progress had been achieved by the time of writing this report.
15.12 Essential Drugs Procurement and Distribution
The Government through the Ministry of Health has a Memorandum of Understanding (MOU) with National Medical Stores (NMS) to stock assorted pharmaceutical drugs and medical supplies. Under the MOU, NMS is required to distribute products belonging to Government (3rd party distributions donated to the Government of Uganda) and also stock products or drugs for sale. During the year, I carried out an audit of the distribution programme and the following were my observations:-
146 (i) Under Deliveries In the year under review medical supplies worth Shs.19,618,996,007.27 were ordered for by the users. However NMS was able to deliver medical supplies worth Shs.13,458,077,504.03, equivalent to 68% of the quantities ordered. It is through this method that the Ministry through the credit line provides essential drugs to the Hospitals.
According to the memorandum of understanding NMS is obliged to ensure 100% fulfilment of scheduled orders from end users for the standard kit items. Details of deliveries however show that at no single time was any order fully delivered. In that regard NMS has not demonstrated full commitment to the provision of essential drugs to end users.
(ii) Drugs not Delivered
Verification of deliveries from NMS to DDHS, Health Centres and Users in selected districts showed that sometimes drugs issued were not delivered at all.
For quantifiable drugs, distributions worth Shs.2 billion were examined. Out of this, documentation relating to drugs valued at Shs.290 million could not be traced. The end users did not also have knowledge of these deliveries either. The drugs included ARVs, Coartem, Condoms and oral rehydration salts.
The Accounting Officer explained that the Ministry has been monitoring the performance of NMS with regard to compliance with the Memorandum of Understanding and added that these concerns had been drawn to the attention of NMS during their joint technical meetings. She further stated that the MOU would continue to be reviewed to ensure improved performance. I am yet to review the outcome of this process.
(iii) Non existence of drug dispensing Records
147
The issue of drugs from stores, and dispensing at the health centers and Hospital wards, is not recorded. Several interviews with Patients in Hospital wards revealed that they were ignorant about their right to free medicine.
The Accounting Officer explained that under decentralization, the Districts are responsible for management of these Health Centres. Under the PHC districts are expected to use up to 50% of their non-wage grants on stationery including record books. She also explained that the Ministry is also sensitising the population on their right to free medicine.
15.13Support to the Health Sector Strategic Plan Project ADF Loan No.F/UGA/PL/IBA/2001/1 and Grant No.F/UGA/GA/IBA/2001/1
15.13.1Counterpart Funding It has been noted that the government budgeted for Shs.6,120,000,000 to finance part of the project costs in the financial year. However, only shs.5,057,203,000 was released leading to a shortfall of Shs.1,062,897,000. This affects timely implementation of the project activities.
Management attributed it to the financial constraints that government may have faced during the financial year. Management also noted that such deficit in releases results in the outstanding balances to the contractors and service providers at the end of the financial year (especially for VAT), leading to domestic arrears. Management was advised to follow up the shortfall in funding in order to finance outstanding payments to contractors and suppliers.
15.13.2Supply of Specialized medical Equipment and Furniture It was noted that a company supplied medical equipment worth Euro.795,455. However part of the medical equipment was found to have major deviations from the recommended specifications and the supplier was requested to rectify the anomaly. The equipment includes: • Examination couch with lithotomy poles (100) Euro 24,000
148 • Surgeons stool (21 pieces) Euro 2,100 • Linen Trolley (6) Euro 1,200 Euro 27,300
At the time of audit in September 2007, there was no evidence to show that the supplier replaced the above mentioned equipment. Management explained that since the supplier has not replaced the equipment nor rectified the anomalies, it was decided not to pay him for the 3 items, an amount equal to Euro 27,300 and that if the supplier continuously fails to replace the equipment, government will look for other alternative ways of procuring the 3 items for the health centres concerned.
15.13.3Outstanding Payments to Contractors/Suppliers At the time of audit in October 2007 the project had outstanding bills to the various contractors/suppliers of goods and services totalling Shs.819,800,098.
The bills have been outstanding for over a period of one year. This may lead to litigation being taken against the project. Given that the project has now closed, it is not clear how the project management intends to settle these bills.
Management explained that because of inadequate releases of funds by government during the financial year, the project was not able to meet all its financial obligations in time. Since then some bills had been cleared while for others the contractors had not completed their work.
Management was advised to pursue and settle the outstanding payments so as to avoid future litigation costs.
15.13.4Fixed Assets Management The project maintains a fixed assets register. However, specialized medical equipment and furniture supplied under the three lots and distributed to 149 the health centres had not been included in the assets register. This weakens controls over management of project assets. In addition, it is now a requirement by African Development Bank (ADB) that a comprehensive fixed assets register forms an integral part of the financial statements.
Management explained that during the financial year under review, the project procured a lot of items under the 3 lots for Butabika Hospital, 32 health centres in 11 districts and 6 mental health units at referral hospitals and that the updating of the assets register especially for items sent upcountry had taken longer than anticipated. It was indicated that the exercise was ongoing and was to be completed soon.
Management was advised to have a complete fixed assets register for all assets procured using project funds inclusive of the specialized medical equipment and furniture.
15.13.5Status of Previous Years Recommendation It was noted that audit findings identified in the previous year audit were still unresolved:-
(i) Construction of VIP Latrines It was noted that the construction of pit latrines had not been fully completed. At the time of audit in November 2006, 186 out of 780 blocks had been completed and handed over representing approximately 24% of the works.
Management explained that during the financial year under review, there was considerable improvement in progress of work and by 31 December 2007, all the works were complete except for one company whose all 100 blocks are still at different stages of completion and the matter has been referred to the Solicitor General for legal redress.
150
Management is advised to closely follow up with the Company to ensure that all the 100 VIP latrines are completed as envisaged in the contract agreement.
(ii) Defective Specialized Medical Equipment and Furniture The National Advisory Committee on Medical Equipment (NACME) of the Ministry of Health verified the equipment and furniture delivered by the suppliers. As per the interim report, several items were found to be non compliant with regard to the generic specifications.
Management explained that all the 3 suppliers were provided with the NACME reports of all non compliant items and they made good for most of them (replaced or rectified) and that the equipment were re-verified by NACME and accepted except for the following:- • Lot 1: The X-ray machine is still not meeting the specifications and NACME has asked the supplier to replace it. The supplier is still to make good. The supplier promised he is coming in January 2008 to address the problem. • Lot 2: Ms. Gatero Instruments Ltd is yet to replace the examination couches, surgical stools, linen trolley as indicated in B1 above. • Lot 3: MJ Medical replaced all furniture that had not met specifications.
In the case of lot 1 and lot 2, management and NACME is advised to liaise with suppliers of the defective items so that they are replaced according to the agreed specifications.
(iii) Delayed Payment of the Contractors Bills The project still experienced delays in settling outstanding payments to the contractors/suppliers. 151
(iv) Gravity Water Installation at Kaproron Health Centre in Kapchorwa District
At Kaproron Health Centre, there was no water and yet the sub- contractor was paid US$ 71,249.66 to rehabilitate and protect four spring wells at Bukwa, Chesoweri, Kapronon and Sipi Health Centres. The absence of water in the health centre affects the provision of medical services to the local communities.
Management explained that PMU wrote to the CAO and District Water Engineer (DWE) who supervised the works to rectify the remedy. Reports from the DWE indicate that the contractor was made to redo the pipe network for the scheme which he had omitted (as per contract). However, the flow of water to the scheme was not adequate because the water source, given in his scope of work, was inadequate. As a result, the district has identified some funds to connect this network to another water source that is more reliable.
Management should liaise with CAO, Kapchorwa District to ensure that this matter is concluded accordingly.
16.0 WORKS AND TRANSPORT
16.1 Non-Deduction of withholding Tax on the Contract of Redevelopment of State House - Entebbe
A contract was signed with a foreign-based Chinese contractor; to develop State House- Entebbe at a contract sum of US $ 20,845,618.30 (UGX 38,564,393,854). However, examination revealed that the Ministry paid the contractor gross without deducting withholding tax estimated at US $5,537,962. In the absence of evidence of exemption, non deduction of
152 the tax constitutes a tax offence for which penalty is payable. In a written reply the Accounting Officer stated that a letter of exemption was available. However, this was not availed by the time of issue of the report.
It is recommended that evidence of tax exemption be availed for verification. In the alternative the tax amount is recoverable.
16.2 Budget Performance 2006/07
A review of the budget performance revealed that 17 activities planned and budgeted for the year remained incomplete by the year-end. It would appear some causes of delays such as procurement of contractors and consultants could have been addressed expeditiously by management since prequalified lists are in place. Where weaknesses are attributed to the Contractor as in the case of Northern by Pass, penalties ought to be imposed. Other causes such as delay in release of funds ought to be addressed by MOFPED. A separate column indicating specific management responses is included herewith. It is noted that failure to meet target outputs prolongs public access to proper infrastructure and undermines achievement of value for money.
1. Key output Target Achievement Budgeted Deficiency Management output amount response. released- UGX 2. National roads Routine 10,358 km of 7.64 billion 211 km of Money and time maintained to maintenance roads roads not not matched all weather -Manual maintained maintained during release of standards maintenance funds by of 10,569 MOFPED. km Periodic 28.6 km of 3.0 billion 116.4 km of As above. maintenance roads resealed roads not - resealed. 145 km of the road network resealed. 3. Kafu-Masindi 47% 22% completed 1 billion 34.32 km of 7.88Billion road 44 km upgrading by FY end budgeted road not required but only upgraded to works but 6.3 upgraded 1billion approved class II bitumen completed billion spent in budget 153 standard by the (530%) financial year end 4. Construction 10% of 0% of works 0.1 billion 10% of works Delays supervision of works completed not completed occasioned by 21 bridges in completed prolonged NW Uganda evaluation, procurement and negotiation processes. 5. RDPPI- 30% of 20% of works 0.5 billion 7.6 km Delays Upgrading works completed incomplete occasioned by Kiboga-Hoima completed breakdown of road-76km contractor’s equipment and fuel shortages.
6. RDPP2- 50% of 35% completed 2 billion 4.125 km Rehabilitation works budgeted incomplete of F/Portal- completed but 2.65 Hima road- released 55km (132%)
7. RDPP2- 20% of 0% completed 3.5 billion Approval for Matugga- works detailed Semuto- completed engineering Kapeeka road designs delayed at NDF/World Bank.
8. RDPP3- 30% of 0% completed 1.01 billion Delays occurred Kampala- works in procurement Gayaza- competed of contractor and Zirobwe- supervision Wobulenzi consultant. roads
9. RDPP3-Accident 100% of 20% completed 0.5 billion Black spots at Delays occurred black spots works Namukomago, in procurement improvements completed Namagunga, of contractor. Namataba, Kawolo and Sagazi, along Jinja road still incomplete 10. RSSP1-Kabale- 15% of 5% completed 2 billion GOU 10% Late Kisoro- works and 26.26 incomplete procurement of Bunagana- completed billion donor supplementary Kyanika road funds loan. against 11.65 billion budgeted 11. EDF- Kampala- 60% of 35% completed 1.15 billion 25% Various Northern works incomplete weaknesses on Bypass road completed the part of Contractor in project management, asphalt surfacing works and failure to provide natural materials. 12. District, urban 200km of 191 km done 1 billion 9 km undone 154 and community district roads access roads rehabilitated rehabilitated under AAMP (TR 75 A) 13. 350 km of 325km under 4.2 billion 25 km not Late release of district roads rehabilitation rehabilitated funds to districts. to be rehabilitated by districts 14. 500 km of 403 km 0.3 billion 97 km not DANIDA funds district rehabilitated done released as per roads+ calendar year rehabilitated and not financial under year. DANIDA program in Eastern and Northern Uganda 15. 540 km of 410 km done 0.3 billion 130 km not Funds released D/roads done at end of f/y rehabilitated 2006/07. under STABEX –EU funding 16. Urban roads 15km 8.5 km done 1.2 billion 6.5 km not Only 40% of resealed resealed in done budgeted funds Njeru, released. Kabale, Masindi and Kampala 17. Construction of Building 38% completed 20 million 22% Inadequacy of markets and works incomplete funds. workplaces in supervised, and around 60% Kampala completed supervised
Procurement processes for contractors and consultants should be adequately and timely planned to avoid delays. Non–compliant contractors ought to be penalised.
16.3 Road Development Programme – Phase 1 Project Development Credit Agreement Number 3267 – UG
The objectives of the Project are:- • To upgrade two of the highest priority roads of Busunju-Kiboga-Hoima and Nebbi-Arua, including related construction supervision; • To carry out sector policy and management studies, including those related to feeder roads. These studies were financed under the Project Preparation Facility (PPF); and
155 • To carry out audits under the Programme through the provision of technical advisory services.
The following observations were made and drawn to the attention of management during the audit of the Project.
16.3.1Progress on contracts C005 and C006 (Busunju – Kiboga, Kiboga – Hoima) Following the receipt of the performance and advance guarantees on 10th December 2003 and the World Bank’s ‘No Objection’ declaring the Deeds of Novation effective, the contractor (SCEL) was permitted to proceed with the upgrading of the roads. However, the progress of civil works has continued to be slow due to the cash flow problems of the Contractor.
Busunju-Kiboga (C005): Between 30th June 2006 and 30th June 2007, the Contractor had completed an incremental 17.4% of the weighted works compared to the 28.3% annual expected performance. Cumulative completion was at 82.4%. It had been planned that the Contractor would complete the works by July 2007; however, the Contractor’s standing programme indicated the works will be completed in November, 2007.
Kiboga-Hoima (C006): Similar to Busunju-Kiboga, the contractor had completed an incremental 22.5% of the weighted civil works progress only in comparison with the expected progress of 31.9% between June 2006 and June 2007. By 30 September 2007, the contractor had completed about 87% of the weighted works on the section.
Furthermore, despite minimal activity on both contracts, normal supervision costs have continued to be incurred.
The implications are that:- • The contractor may not be in a position to proceed with the contract and later on execute it efficiently and effectively. 156 • Delayed execution may lead to costs exceeding the budget, especially the supervision costs.
Management and other stakeholders should devise possible ways to address the impending possibility of not completing works on time and failing to obtain funding for the works after expiry of the credit.
Management explained that the contractor did not execute the works as per program due mainly to:- • Shortage of fuel in the country during the months of March, April and May 2007 and • Excessive rains experienced in the region.
Management estimated that substantial completion of C005 will be on the 15th December 2007 and C006 at the end of February 2008 and that payments for works during the defects Liability period will be secured by a bank guarantee from the contractor given that it will cover a period after Credit expiry. The current expiry date is 30th June 2008.
16.3.2Progress of Physical works on Kawempe – Luwero Road From the review of the cash out flows on the Kawempe-Luwero-Kafu project, it was noted that actual cash flows were only 43% of the projected figure. This was indicative of a potential delay in works performed by the contractor.
It was also confirmed from the Consultant’s progress report of July 2007 that the contractor on the road was behind schedule by 4 weeks. As per the contract for civil works on this road, work commenced on 8th February 2007. Therefore work on this road had proceeded by approximately 5 months as at the date of the progress report implying that 4 out of the five months had been lost.
157 Inefficiency of the contractor will delay accomplishment of the road. There is also a risk that delays by the contractor are likely to increase proportionately with time.
It was recommended that the contractor be monitored to ensure that delays are checked.
Management attributed the set backs to the need to: • Review the original design for this road. • The national fuel crisis of April to May 2007 brought construction operations to a near halt; • The unusually heavy rains since May 2007 have slowed the contractor’s progress;
It was also explained that this Project had lost approximately 4 months due to the above-mentioned factors that are outside the contractor’s control. The contractor has improved his equipment stock holding in order to accelerate the work. RAFU is also closely monitoring this project to ensure that any potential problems to the project are sorted out quickly enough to avoid further delays. It is envisaged that this project will be concluded by June, 2008.
16.3.3Payments for Land and Property compensation During the review of expenditure, it was noted that land and property is paid in instalments to beneficiaries which was found to be improper. The process of compensating the land owners has been slow with some of the individuals still receiving partial payments.
It was also noted that there were still some villages that were yet to receive any compensation namely; Bukomero, Mataagi, Temankali and Lukuga.
158 The delayed payment of compensation to the beneficiaries has also witnessed increased value of land, most of the land being currently paid lower than their current value. This has resulted in a few of the land owners refusing to surrender their land titles as they collect their compensation particularly in the Kiboga Town Council. However, these have only been a few cases.
Some of the individuals who have handed over their land titles have also expressed discomfort about the delay in processing these land titles leading to the failure of the beneficiaries to utilize their asset for other purposes like security.
It was recommended that installment payments be stopped as Monitoring of land and property compensation payments may turn out to be difficult. Management explained that RAFU has taken over payment of compensation from the contractor. The contractor has given accountability of the outstanding payments including partial payments which have been verified by an independent auditor, to enable RAFU continue with payments, with the assistance of the district officials and that all payments will be completed by 31 December, 2007.
16.4 Road Development Programme – Phase II Project Development Credit Agreement Number 3544 – UG
The objectives of the Project are:- • Upgrading to paved (bitumen) standard the Karuma-Olwiyo-Packwach gravel roads and strengthening of the Katunguru-Kasese-Fort Potal, Kasese-Mpondwe (Equator) and Kasese-Kilembe roads, including related construction supervision. • Implementation of the first phase of a National Road Safety Action Plan; • Consultancy services for mitigating of “black spots” along two transport corridors (preparation of designs, bidding, documents and supervision);
159 • Preparation of a national Transport Master Plan and provision of Technical advisory services for innovative technologies for construction of low volume traffic roads; and • Design and construction supervision of the National Road Agency building.
16.4.1Government of Uganda (GoU) Contributions Despite the persistent shortfall of counterpart funds from GoU to this Project, It was noted that GoU contribution reduced from Shillings 12.3 billion in the financial year 2005/6 to shs.10.5 billion during the financial year 2006/7. As a result, the project has continued to face difficulties effecting prompt payment of contractors’ and consultants invoices and any related taxes as they fell due. As at 30 June 2007, management indicated the Project debt position as:- Amounts due in respect of: Amount UGX Amount USD Civil works 2.3bn $3.4m Consultancy supervision 17.3m 40,951 Withholding tax 613m -
All contracts have a provision to charge interest on overdue payments.
Section 3.01 9a) of the DCA requires GoU to provide promptly as needed, the funds, facilities, services and other resources required for the Project and section 3.04 (c) requires GoU to make quarterly deposits into the project Account as shall be required to replenish the account to the amount in Uganda Shilling equivalent to US$ 3 million as GoU’s contribution to the Project.
However, this was not fully complied with the implication is that the Project may be subjected to an extra cost of accrued interest claims in form of penalties on delayed payment of invoices.
160 The GoU should adhere to its commitment to provide its financial contribution to the Project on a timely basis as agreed in the DCA.
Management explained there was an improvement in the GoU cash releases but the budget fell far short of the required counterpart funding to implement the project. This is because of the inadequate GoU revenue and the related cash limit budget system.
16.5 Contract Variation and Supervision
16.5.1Contract Variations Two road construction contracts were varied by more than the maximum limit recommended by the PPDA Act and regulations. One contract for the resealing of Kibuye-Zana-Entebbe Airport Road was varied by 47% while another for construction of Lugazi bridge was varied by 59%. Although necessary approvals were obtained such huge variations indicate a possibility of weaknesses in planning particularly at the design stage and resource allocation level.
During discussions, the Accounting Officer attributed the variations to limited resources. He explained that delayed fund disbursements to the Ministry cause extended contrast durations which in turn lead to cost variations.
16.5.2Supervision Periodic maintenance of five murram roads measuring 288 km cost the Ministry Shs.511,912,500 in consultancy (supervision) fees. Although approval were obtained for the procurement, measures should be devised to reduce on these costs. The Ministry should develop internal capacity to carry out the supervision as it may be cheaper in the long run. The regional Executive Engineers can be a useful resource for the purpose.
161 16.6 Special Audit of Payroll On the request of the Accounting Officer and Criminal Investigation Department (CID), we carried out a special audit of the payroll of the Ministry. The objective was to ascertain whether the names on the salary payment schedules to banks reflect genuine staff of the Ministry and determine whether loss was occasioned by government. In the report made to the CID I made the following observations;
• It was noted that some staff appearing on the Ministry’s payroll particularly in the salary scale U7 and U8 were not appointed properly in accordance with Government Standing Orders and other regulations. This was further evidenced by some correspondences on record where a Clerical Officer was accused of irregularly issuing appointment letters on behalf of the Permanent Secretary without authority of the Public Service Commission between 1999 and 2002.
In her (Clerical Officer) unreferenced response against the accusations levied, dated 21st November 2003, the officer consented to have issued out appointment letters through irregular means and facilitated illegal entrants into the service. Eighteen (18) officers were noted as having been appointed irregularly by the Clerk according to her letter.
The Accounting Officer has explained that disciplinary action was initiated as far back as 2003 but the procedure delayed due to various consultations among the Ministry of Works, the Public Service Commission and Ministry of Public Service. However, the officer was subsequently interdicted and dismissed from government with effect from 3rd December, 2007.
• A detailed scrutiny of the salary payment schedules and the IFMS records for the period under review was undertaken. It was noted from 162 our reconciliation of the salary payment schedules from Uganda Computer Services with the actual salary payments on the IFMS that a total of Shs.137,016,497 was paid out as salaries to various Commercial Banks without supporting schedules.
In absence of supporting salary schedules the payments appear doubtful and irregular and could have caused financial loss to government. It is also not clear how the salaries were processed.
My scope of audit was limited by the failure to access information from the banks relating to the beneficiaries of the unsupported payments.
Management explained that salaries are normally remitted to Commercial Banks with supporting salary schedules. However, in the case mentioned above the schedules cannot be traced. The Ministry explained that it requested an outsourced computer expert and CID to follow up the matter. In the meantime the suspects have been interdicted.
It is recommended that the Criminal Investigation Department (CID) carries out further investigations with the concerned Banks in order to ascertain the beneficiaries of the unsupported payments and also establish the eligibility of the recipients.
It is further recommended that the Ministry liaises with the Public Service Commission to verify all appointments, retentions, confirmations and Public Service Minutes for all staff in the salary scales U7 and U8.
16.7 Audit Inspection-Weighbridges
163 An audit inspection was carried out in August 2007 at the two weigh bridges situated at Lukaya on the Kampal-Masaka highway and Mbarara and the following were my observations:
16.7.1Kampala-Masaka-Mutukula Mobile Weighbridge
It was explained by the officer in charge of the mobile bridge that on exceeding the maximum axle load, a charge sheet is filled detailing the particulars of the vehicle and driver, time, particulars of each offence and issued to the driver, who, in the company of a police officer proceeds to court, where a fine is determined through a court ruling by the magistrate.
The driver may either pay cash in the magistrate’s office (to cashier), to the bank, or to the Uganda Revenue Authority office. A general receipt is finally issued to him. The computer print out of the details of measurements together with a copy of the general receipt is then filed in the weighbridge records.
It was revealed that the weighing of the vehicles, charging and fining are governed by the Traffic and Road Safety (Weighbridges) Regulations of 2004.
It was discovered that whereas it is the Ministry’s responsibility to enforce the traffic and road safety regulations so as to protect the national roads through deterrent fines, the discretion of the extent of the fine was left to the court, who may not be particularly aware of the costly process of resealing and maintenance of the damaged roads as the Ministry itself. This may lead to leniency to the culprits by the courts and complacency by drivers, hence continued overloading and eventual damage to the roads.
164 It is recommended that the Ministry devises means of ensuring that the culprits are fined amounts which are realistic. This can be done by entering on the charge sheet the amount of fine for each offence committed.
16.7.2Mbarara Weighbridge
It was observed that for the entire financial year 2006/07, the overloaded vehicles were being fined between Shs.100,000 and Shs.200,000 with Separate isolated cases of Shs.300,000, Shs.400,000, Shs. 1 million and Shs.2 million, or even a mere caution. The explanation was that it was the magistrate’s discretion to determine the fine. At the same time between 3rd and 7th of March 2007 when the magistrates were on strike, the police stepped in to avert the crisis where overloaded vehicles impounded were congesting the weighbridge yard and drivers were complaining. As a result the police were fining all culprits only Shs.80,000 irrespective of the offences. It was discovered that the Police had treated all the cases as traffic offences and ignored the Traffic and Road safety Act.
Although the latter one was an isolated incident, the two cases above are doing little to help the Ministry meet its objective of protecting roads against damage through overloaded vehicles. This is because the culprits will prefer to overload and pay the small fines preferred on them while damage to the roads goes on unchecked.
The Ministry needs to come out clearly on the fines carried by each axle overload offence committed, by prescribing the relevant fines payable on the change sheet, instead of leaving it to the magistrate’s discretion. The courts should instead help to enforce the Act through preferring the fine (payment or imprisonment).
165 The two Ministries of Works and Justice therefore need to harmonize this position so as to achieve the intended objective of protecting the national roads.
The Accounting Officer explained that the Ministry noted the anomalies on the fines from the magistrates courts and wrote to the Solicitor General but no tangible results were forthcoming. The Ministry then initiated the amendment of the Traffic and Road Safety Act to decriminalise the offence and instead prescribe fees which will be directly paid to the weighing bridge and then banked on the special account for the Road fund.
16.7.3Absence of Weighbridges on Major Highways
There is absence of weighbridges, fixed or mobile along Mbarara Ntungamo-Katuna boarder, Mbarara-Kasese-Bwera and DRC Congo boarder. It is therefore possible that overweight trailers carrying cement, coffee, scrap metal and other goods have travelled from Hima, Kasese, Mbarara,Ntungamo or Kabale to Rwanda or the DRC with out hindrance, damaging the roads along the way for some time.
The Ministry therefore needs to urgently procure and station at least three mobile weighbridges along these routes if the original objective of minimising damage to paved roads is to be meaningful.
The Accounting Officer explained that the matter is to be addressed under the Transport Rehabilitation Project.
16.8 East African Civil Aviation Academy (EACAA).
16.8.1Legal status, operational and financial status
I commented about the legal status in my report for the year ended 30th June 2006 (ref 15.5) but I am not aware of any action that has been initiated to resolve the matter. The EACAA was established in Soroti by a 166 treaty of the East African Co-operation in 1971 to train pilots and aircraft maintenance engineers mainly for the then East African Airways. It was supported by the UNDP and the International Civil Aviation Organization (ICAO). The support included appraisal training programmes, providing instructors and equipment and linking the academy to other Civil Aviation Institutions outside East Africa.
In 2006, the Ministry of Public Service carried out a restructuring survey and produced a report to that effect for cabinet approval. However to date the report has not been tabled.
The academy offers pilot, flight operations, electrical and engineering courses to students admitted from the East African states and surrounding states, on both sponsored and self-sponsored bases.
It charges and collects fees for these courses, which, together with grants from the Ministry of Works and Transport, constitute the funding base for its operations. The Academy is supposed to be headed by a Director, but is currently being headed by an officer who has been reportedly acting for nine years, pending substantive appointment. This is quite unusual and contrary to Public Service standing orders, which limit the “acting” capacity to one year.
As reported last year, the academy does not have the legal mandate to operate independently. According to the Acting Director, it still operates under and is funded by the ministry and its financial operations are governed by the same regulations as the ministry and the latter is supposed to monitor and supervise these operations.
There was also no evidence that the Ag Director of the school was formally appointed as receiver of revenue and as imprest holder as required by the regulations. This implies that it is irregular for him to collect revenue and 167 administer public funds as well as accounting for them, because he lacks the authority to do so.
The legal status, institutional framework, funding and financial reporting of the Academy should be resolved promptly. In the meantime the Director could be formally appointed as an Imprest Holder and Receiver of Revenue.
17.0 DEFENCE
17.1 Excess Expenditure According to the Statement of Financial Performance, the Ministry spent a total of Shs.14,471,106,588 in excess of the approved budgetary appropriations without relevant authority. Against a budget of Shs.389,295,441,999 the Ministry incurred actual expenditure of Shs.403,766,548,587 leading to excess expenditure of Shs.14,471,106,588.
This indicates breakdown of controls over budgetary expenditure. The Accounting Officer attributed this to domestic arrears which arise due to inadequate budget resources, maintenance of auxiliary forces and unpredictability of activities of the Ministry.
17.2 Salary Arrears for Auxiliary Forces
A total of Shs.16,300,000,000 was paid to Bank of Uganda in June 2007 to cater for salary arrears of Auxiliary Forces for various months in UPDF.
However, by the time of writing this report only Shs.15,012,860,000 had been accounted for leaving a balance of Shs.1,287,140,000 still un accounted for.
In the absence of accountability I was not able to satisfy myself that the amount was utilised for the intended purpose.
168 The Accounting Officer should ensure that the accountability is followed up and tendered.
17.3 Supply of Army Uniform A sum of U.Shs.177,411,857 was paid to a firm as part payment for the supply of uniforms to UPDF. Supporting documents indicate that the firm was to supply 2,200 shirts each at 20,475 equivalent to Shs.45,045,000 and also 4,437 sets of ceremonial uniforms each at 220,000 equivalent to Shs.976,140,000 all totalling to U.Shs.1,021,185,000. However, records show that the firm initially supplied only 2,200 shirts out of the total consignment but under unclear circumstances sued the Ministry for non payment of the whole contract sum in a civil suit No. 226 of 2004. A consent order was subsequently signed between both parties in April 2005. The following matters were further noted.
• The consent order signed in April 2005 required the Ministry to pay Shs.1,860,850,180 as full payment for uniforms supplied by the firm payable in ten (10) equal instalments. The firm was also to be paid 16% interest on the outstanding amount (1,860,850,180) for the period from May 2003 to October 2005, the period the amount had stayed outstanding.
The basis upon which U.Shs.1,860,850,180 was arrived at by both parties despite the fact that not all items were delivered was not explained. The awarding of interest at a rate of 16% on U.Shs.1.860,850,180 totalling to U.Shs.744,340,072 for a period of 30 months (May 2003 – October 2005) was also not properly explained.
• On 18/08/2006 the Ministry of Defence signed a new agreement with the firm acknowledging the debt of U.Shs.1,860,850,180. In this agreement the firm also agreed to supply the balance of the undelivered items. The Ministry also agreed to pay interest for 38 months (May – July 2006) totalling to U.Shs.942,830,768. This agreement pushed the 169 Ministry’s indebtedness to a total of U.Shs.2,803,680,948. (i.e. 1,860,850,180 + 942,830,768).
Basing on this new agreement, the Ministry stands to lose or incur nugatory expenditure of U.Shs.1,782,495,948. This represents the amount by which the payment will exceed the amount payable under the original contract (2,803,680,948 – 1,021,850,000). It was also noted that the firm has continued to charge interest at the rate of 16% on principal amount (1,860,850,180) despite the fact that the consent order which was signed by both parties had agreed to charge interest for only 30 months.
The Accounting Officer should investigate this matter further to avert a possible loss to government.
17.4 Irregular Contract For Repair of Helicopter MI-24
A sum of U.Shs.758,955,527 ($ 404,000.60) was paid out against a contract for the overhaul of Helicopter M1-24. The contract sum for overhauling the helicopter was US $790,000. However the contract does not give a detailed break down and pricing of work to be done. I was therefore not able to ascertain and verify the work done against the amounts paid.
On scrutinising the contract, it was noted that one of the clauses provides for separate billing over and above the contract sum in case during the overhaul some parts are found to be irreparable. However in the absence of a detailed list of what was to be done in the overhaul, such a clause leaves room for manipulation to the disadvantage of the Ministry.
It was also established that adjustments to the contract price worth US $ 32,000 were not properly supported and were authorised by one officer who also happened to sign the acceptance certificate after the overhaul.
170
The Accounting Officer is advised to provide full accountability for payment. Contracts should also always be properly drawn up to reflect details of work to be carried out and its costing.
17.5 Undelivered Procurements – Spare Parts For Low Loaders
A total of Shs.293,967,305 was paid to Bank of Uganda to open a Letter of Credit in favour of a local company in respect of supply of two new engines (Shs.237,398,650), Axle Hanger bushes (Shs.14,608,400), Engine Parts and others (Shs.39,061,900).
However, verifications revealed that only items worth Shs.263,059,241 were delivered and the firm accordingly paid. The Letter of Credit expired without the balance of Shs.14,608,400 being utilised. The purpose to which the amount was spent was not explained during the audit.
17.6 Borrowings not Refunded
A total of Shs.657,920,350 was borrowed from the computerisation account to finance various activities within the Ministry and was to be refunded before the closure of the financial year. However, by the time of filing this report only Shs.562,035,000 had been refunded leaving a balance of Shs.95,033,000 outstanding. I advised the Accounting Officer to recover the borrowed funds to avoid constraining the project in achieving its objectives.
17.7 Overpayment to a Hotel
Shs.20,404,350 was paid to a Hotel to settle Hotel bills for Ministry of Defence guests. Two un-referenced tax invoices were submitted for payment, one invoice had Shs.1,437,120 and US$3,496 and the second invoice had Shs.2,414,430 and US$5,700. Both Invoices were faxed from the Hotel before being endorsed by the Ministry guests. 171
It was established that although the 2nd invoice was part of the 1st invoice, the Hotel in their handwritten demand to the Ministry treated each tax invoices separately.
This led to an overpayment of Shs.1,437,120 and US$3,496 totalling to Shs.7,729,920 . I have advised the Accounting Officer to investigate and accordingly recover the over payment.
17.8 Domestic Arrears of National Water and Sewerage Corporation
A service provider (NWSC) submitted outstanding bills to the Ministry of Defence totalling to Shs.6,564,966,267 as at 30/06/2007. A review of documents in the Ministry indicated that a total of Shs.8,147,525,881 had been paid to the provider. However, statements from NWSC showed a total of only Shs.6,330,421,254 as funds received from the Ministry leaving a balance of Shs.1,817,104,627 paid not reflected on NWSC statements.
In the absence of an up to date reconciliation by the Ministry, I was not able to ascertain the actual bills outstanding.
17.9 Audit Inspection
An audit inspection of Entebbe airbase and Katabi Barracks revealed the following matters -
17.9.1Accommodation
Some officers are accommodated in the Ministry of Defence Houses. However, the houses are dilapidated and require renovation. The Administrative Officer attributed this to inadequate funds for maintenance.
172 The Accounting Officer explained that the construction unit has been tasked to earmark funds for renovation of the barracks.
17.9.2Katabi Barracks
(i) Katabi Secondary School
It was noted that Katabi secondary school is located in the Barracks without any fence separating the School from the Barracks. Girls’ dormitories have no fences and are located next to houses accommodating male soldiers. The dormitories are also very congested with no flash toilets. The pit latrines used are located outside the dormitories which expose these young girls to more insecurity.
The Accounting Officer explained that due to dilapidation and the need for better security for the school, there are plans to relocate the school to Kitala.
(ii) Water Tank
There is wastage of water from a leaking water tank. This partly explains the high water bills.
The Accounting Officer explained that the whole water system in the barracks is too old and requires complete overhaul. She added that she was in touch with National Water and Sewerage Corporation to undertake the capital repairs.
(iii) Land not Surveyed
It was also noted that land occupied by Katabi Barracks is not surveyed and has no land title. Therefore we could not clearly see the boundaries of the barracks. The problem of encroachers cannot be ruled out as nice looking buildings were seen next to the barracks. 173 The Accounting Officer explained that much of the Ministry land is not surveyed and as a result they had acquired survey equipment and Survey Unit to have all Ministry land surveyed including Katabi land.
(iv) Air Base Stores
A visit to the technical store revealed that the technical store requires general repairs. Some stores are leaking thus exposing spare parts to rain water and rust. Since their construction, no funds have ever been provided for repairs despite the fact that very expensive spare parts, including those of MI 17 and MG.24 air craft are kept there.
The Accounting Officer attributed this to limited funding and further indicated that funds had been earmarked in the new financial year to address the problem.
17.9.3Kakiri Barracks (1st Division)
It was noted that the stores are in a very poor condition due to their dilapidated state. They also have poor ventilation, lighting and shutters and are infested with rodents and bats. It was observed that the last fumigation was done in 2004. We have therefore recommended to the Accounting Officer to spare some funds and re-fumigate the stores.
The Accounting Officer explained that these are temporary stores and that the Ministry is planning to put up new stores in the division.
17.9.4General Military Hospital Mbuya
(i) Funding
The G.M.H referral hospital receives only Shs.1,920,00 per month for maintenance of buildings and general running of the hospital. This is very little money given its size and the fact that it is a referral hospital. Insufficient funding has led to non functioning hospital equipment.
174 The only X-ray equipment in the Hospital broke down due to power surge, after less than a year of repairing it at a cost U.Shs.24,514,760. This machine is reparable but has been left to deteriorate.
The other X- Ray machine which was picked from former Kiseka Hospital has a faulty control device which needs replacement according to the Radiographer.
The Dental equipment and eye equipment got a functional problem when the fire broke out in the surgical ward and are also not functioning. Without such equipment, it is difficult for the hospital to offer good services.
17.9.5Kaweweta Training School
The school is heavily indebted to various supplies who were engaged to supply ration. This may affect its operations. It was established that authority was given to contract local contractors to supply ration worth 338,486,500 during the year. However, by the time of writing this report only Shs.215,996,500 had been paid leaving a balance of Shs.122,490,500 outstanding. Non payment of local suppliers indicates weaknesses in the Ministry’s commitment control system.
The Ministry is therefore at risk of being sued for non payment which may result into unnecessary legal costs.
18.0 INTERNAL AFFAIRS
18.1 Unaccounted for Visa Stickers to Foreign Missions
Visa stickers issued to the various foreign missions in different denominations worth US$352,500, €218,900, AUD187,500, CDN$80,000, CHF30,000 and ₤138,250 were not accounted for. Further, there is a tendency for Missions to vary the face value of stickers issued to them. It
175 was also noted that some stations and missions had not yet accounted for. Stickers issued to them which were affected by the price change.
The Accounting Officer explained that all Missions had been instructed to return all the visas that were affected by the price change and that the Ministry was in the process of establishing those Missions which had not complied. I have also advised the Accounting officer to redesign the accountability forms so that they indicate the running balances of visa stickers available at all Immigration points and missions abroad.
18.2 Non-Tax Revenue (Work Permits)
The Ministry collects revenue from sale of various immigration documents to the public and these include among others work permits, dependants’ pass, Pupil’s/student’s pass, visitor’s pass, prohibited immigrant’s pass, special pass, renewal of special pass, duplicate of any permit certificate or pass and certificate of residence.
Audit inspections revealed that there are still large volumes of these documents acquired way back in 1960s that are still in use. The following observations were also made:-
• Status of the Store
The store is a small room with shelves having documents which are tied with ropes. All documents are covered by dust and some have been destroyed by termites leading to their cancellation but no records are kept of cancelled documents. The citizenship certificates in particular were loosely held and kept in sacks and most of them were dirty.
176 • Stores Management Procedures
There were no adequate stores management procedures in place. For instance no requisitions are made for the issue of documents from stores. The Attendant collects the documents from the store on merely verbal instructions and there were no stores documents. The Ministry did not identify and assign a responsible officer to take charge of the stores.
• Stocktaking
For unknown reasons stocktaking has not been carried out on stores for many years.
I explained to the Accounting Officer the risks of mis-handling of such very sensitive documents.
18.3 Spoilt Passports
Inspections carried out at the Ministry’s strong room revealed that passports valued at Shs.37,210,000 were damaged thereby causing a loss to government. This problem has continuously occurred over the years. The Accounting Officer attributed this to human error on the part of applicants while filling in their applications and occasionally on the personnel in the strong room. He indicated that the loss is within the acceptance limit of 5%.
I have advised him to devise means of reducing the loss.
18.4 The National Population Data Bank and Identification The above project was conceived by government sometime back to ease verification of citizenship identification by modernising the national registration systems in the country. Under the programme each citizen was to be issued with a national identity card that uniquely identifies him or her.
177 Records indicate that the entire project is estimated to cost US $54 million and was to be completed in 2010.
However, it was noted that during the year under review no funds were budgeted and released for the project although the Ministry had planned for its implementation. It is also not known how far the Ministry went in resolving the matters regarding the botched procurement that had been initiated two years ago.
The Accounting Officer has been requested for an update on the status of project implementation.
18.5 Audit Inspections
An audit inspection carried out at Goli, Phaida, Vurra, Oruba, Afoji Immigration and Airport Immigration Offices and the following are my observations:-
(a) Staffing
All stations visited are not adequately staffed. On average each station is manned by two to five people. Generally the directorate of immigration has low staffing levels. The level of staffing is still not adequate to meet the ever increasing workload at the various stations.
(b) Office and Staff Accommodation
Office and staff accommodation is also a problem to most of the stations visited. Many offices are housed in unipots while others are in dilapidated houses. Staff are also accommodated in similar houses. There are no indications that the situation will improve in the near future. Entebbe Immigration Office is currently accommodated by Civil Aviation Authority, with only two rooms that
178 are quite small for the number of staff. The general office is a server room as well as the store.
The station also currently has no changing rooms and the officers use the washrooms which are also used by transit passengers.
(c) Office Furniture
Most offices visited do not have office furniture and equipment like computers, which would be necessary for data entry and management. Despite being revenue collecting units the offices do not have safes and cash is just kept in drawers. There are also no telephones in most of the offices. Our inspection at Entebbe Airport Immigration Office indicated that the American Embassy donated computers under the PIECES (Personal Identification and Evaluation System), a stop list system for controlling movement of persons. However these computers lack printers. The system is continuously on and off and therefore not operating efficiently. There is no internet connectivity between this entry point and other entry points. Therefore, a person denied entry from this point can still enter the country through another entry point. The PIECES System is not even connected to the Ministry Headquarters.
The single money detector machine is also defective. There is neither a fax machine nor a photocopier and officers are forced to request for services of neighbouring offices. There is also no money counting machine despite the fact that a lot of revenue is collected from this centre.
Departure and arrival cards are not readily available as the office has to collect them from the Ministry Headquarters weekly and sometimes arrival cards are used yet the information on them varies.
179 There are currently only five counters in operation and there may be a need for more in future. The Passport scanners in place are of a quality that does not swiftly show the information on the screen on swiping the passport.
(d) Rent
Some points are renting office space. For example, Paidha office is renting a single room of about 18 x12 feet at a monthly cost of Shs.120,000. However, there was no valuation report of the Chief Government Valer or his representative neither was the tenancy agreement availed to enable me ascertain and establish the rental charge, the terms of tenancy.
(e) Office Imprest
Most offices do not receive any office imprest which renders operations difficult especially when officers have to travel to town to bank cash collected. Staff at Entebbe Airport Immigration Office are provided with lunch allowance which is not commensurate with the cost of living at the airport. Staff members have resorted to collecting food from outside the airport which is sometimes restricted by the security. They would wish to have their lunch allowance raised or lunch physically provided.
(f) Land
It was reported that Vurra Entry Point identified land for its office construction. However since no payment was made to the owner there is an apparent attempt to take this land by a private person. There has not been any follow up by the head office.
180 (g) Transport
Transport is also a problem to most of the entry points. The office like that of Oraba which is in a remote area, nearly 20km from the town of Koboko, requires means of transport to carry out its operations like banking and official checks at the border. Entebbe office has a very old vehicle, a pickup UG 0023 G which breaks down frequently when either cash is being transported to the bank or when transporting aliens to the centre.
h) Use of Visa Stickers
Audit inspections revealed that visa stickers of different values comprising of Single entry (US$50); inland transit (US$50), airside visa US$30 and gratis (fee Nil) were soon running out of stock. Therefore, there was a risk of losing revenue due to non availability of stickers.
19.0 INFORMATION AND COMMUNICATION TECHNOLOGY
19.1 Rent
The National Social Security Fund entered into a Tenancy Agreement as the Landlord with the Uganda Land Commission to have the Ministry of Information and Communication Technology rent space on 4th floor effective from 1st October 2006. Total monthly rentals was Shs.21,977,264. As at 30th June 2007 rent arrears had accumulated up to Shs.197,795,376 (Nine months rent).
It was however noted that although the tenancy was effective 1st October 2006, the partitioning of offices only started in February 2007 and completed on 12th March 2007. This implies that for 6 months up to end of March 2007 the Ministry was incurring rent yet it was not utilising the
181 office. I consider Shs.131,863,584 rent incurred for six (6) months nugatory.
Furthermore although the Standing Committee of Parliament on ICT had objected to the Ministry moving to NSSF House on the grounds that the rent is too high, management went ahead and moved. Moreover even the Top Management meeting held on 3rd November 2006 had recommended that the Accounting Officer seeks permission from the Committee. There was however no evidence that permission was granted. It is not clear why the Ministry left a free building to take up the payment option.
During discussions the Accounting Officer stated that the new Ministry needed accommodation which was centrally located and he attributed the accumulation of rent arrears to delays in Treasury releases. It is however incumbent upon the Accounting Officer, to ensure that a discussion is held with the Landlord, who is a government entity on the way forward for the six months that the office space was vacant to avoid total loss of the Shs.131,863,584.
I await further action by the Accounting Officer.
19.2 Use of Recurrent Funds for Development Expenditure Out of Shs.178 million paid for partitioning of NSSF House, 4th floor Ministry offices, only Shs.71 million was paid from the capital development budget while the balances of Shs.107 million was financed from the recurrent budget without any evidence of approval to re-allocate funds as required.
The Accounting Officer explained that there were court threats and he had to pay to avoid further costs. I informed him that it is important to maintain budget discipline.
182 19.3 Employee Costs
During the audit of the payrolls for April, May, and June 2007 the following issues were noted: -
(a) Establishment
Although the established members of staff approved by the Ministry of Public Service are 110 staff only 37 have been filled as at the time of writing this report. The Ministry is currently under staffed. This may lead to delayed implementation of the organisational goals.
(b) Lack of Acknowledgment Receipts for PAYE Deductions
Shs.9, 666,401 deducted as PAYE from employee’s salaries had not been acknowledged by the tax authority as indicated below. There is a risk that funds may not reach the intended beneficiary.
PAYE Deductions
Month Amount Comment August 2006 922,546 Receipt not seen September 2006 1,016,080 No Schedule seen January 2007 2,240,000 Receipt not seen March 2007 2,713,182 Receipt not seen April 2007 2,774,593 Receipt not seen
TOTAL 9,666,401
The Accounting Officer promised to liaise with Uganda Revenue Authority for the receipts, but by the time of writing this report, no such evidence had been availed.
The Ministry should expedite recruitments and regularisation of staff to fill up the vacant posts to enable pursuit of its objectives.
183 20.0 LOCAL GOVERNMENT
20.1 Re-development of the Nakawa and Naguru Housing Estate Following the Kampala District Structure Plan published in 1994, the government of Uganda through the Ministry of Local Government started the process of redeveloping of the 66 hectares of land occupied by Nakawa and Naguru Housing Estates into a modern satellite town. The Ministry together with a hired consultant identified a developer to undertake the development of the estate. Open Prime Properties Limited emerged the best bidder and a Public Private partnership was entered into with the government of Uganda giving the developer all the financial, technical and operational obligations and risks in the design, financing, building and operation of the project. Further the Government signed a Memoranda of Understanding with the sitting tenants to allow the implementation of the project.
It was however noted that to date the project has not taken off. The project was halted pending resolution of disputes with the tenants who filed a case against the Government over evictions and land ownership. Meanwhile part of the land has been allocated to other private developers.
With a running contract with the developer and amounts already spent for hiring consultants, government is urged to resolve the impasse to avoid litigation for breach of contract and nugatory expenditure.
20.2 Travel Abroad Payments totalling to Shs.43,158,940 made to facilitate various officers to undertake official travels abroad were not supported by proper accountability. In the absence of the used air tickets coupons or any other supporting documentation I could not confirm that the journeys were undertaken and thus expenditure incurred for the intended purpose.
184 I advised the Accounting Officer to enforce timely accountabilities for the funds advanced to officers for travel abroad.
20.3 Items not taken on charge Examination of accounts revealed that items worth Shs.5,158,720 had not been taken on charge contrary to the stores procedures which require that all purchases have to be taken on charge before being put to use. The practice could be a result of laxity by management to enforce adherence to stores management procedures which could lead to payment for goods that have not been delivered. I was therefore unable to verify whether the items had been delivered and used by the Ministry.
21.0 TOURISM, TRADE AND INDUSTRY
21.1 Stores Weaknesses were noted in stores management procedures. Proper procedures require that the stores ledgers are updated whenever items are received in the stores. It was however noted that in most cases items are not taken on charge and ledgers are not updated. This makes it difficult to ascertain whether items were actually delivered and used. Items delivered are not witnessed by a responsible official, as required. This is partly attributed to lack of store cadres. It was noted that the Ministry does not have stores cadres to run its stores. Stores are being run by a Senior Records Officer of the Ministry Registry. The stores management function should be strengthened by recruiting the right staff who will manage and streamline the stores records.
21.2 Un accounted for advances Treasury Accounting Instructions, require that before approving an advance to staff the previous advances must be accounted for and that the advances must be accounted for immediately after the expense has been incurred. It was however noted that during the period under audit, operation advances of Shs.10,887,750 remained un-accounted for.
185 The Accounting Officer should follow up the accountability in case of failure to account recoveries should be instituted in accordance with regulations
21.3 Procurement There were cases where the Ministry made procurements which did not fully comply with the established Procurement Regulations. For example,
• Shs.99,398,637 was paid to a supplier as part payment for the supply of two vehicles, one for AGOA Secretariat and another for the Ministry. The use of the direct method of procurement in this case was not properly authorised.
The Accounting Officer explained that initially the Ministry had advertised for 2 vehicles. Bids were received and evaluated but additional needs came in for purchase of additional 2 vehicles. Due to limited time left to the close of the financial year, a decision was made to use the two firms that had already been evaluated.
• Shs.5,099,999 was paid to a firm for the supply of one executive office furniture. However a review of the procurement process revealed that the method used of direct procurement was not approved by the contracts committee in contravention of the PPDA Regulations.
The Ministry should follow proper procurement procedures in future to ensure more transparency and value for money.
21.4 Uganda Wildlife Education Centre Trust (UWEC) Project
(i) Land Title Included in the schedule of land and building, is land of approximately 704,235 square meters at a value of Ug.shs.8,450,820,000. However, the Center did not provide me with 186 copies of the land titles. It was therefore not possible to certify the true ownership of this land and the justification of including this figure in the accounts. I have advised management to make all possible efforts to acquire the title of this land.
In his response, the accounting officer indicated that currently, the Uganda Land Commission holds the land in trust for UWEC. However, the issue is still under review by UWEC Board and the Ministry of Tourism Trade and Industry.
(ii) Going Concern It was noted that GEF/PAMSU might not continue providing financial support towards UWEC operations. This implies that the institution is likely to face going concern problems. I have advised the accounting officer to seek for alternative sources of finance to minimize the effects resulting from GEF/PAMSU winding up its support programme with the institution.
In his response, the accounting officer has indicated that UWEC is 57% self reliant as at 30th June 2007, from 20% in 2005. Therefore UWEC is steadily moving towards self-sustenance through cost control and creation of more revenue earning ventures. Capital projects like the new front office, the pier, are some of the efforts. The Government of Uganda has been approached and has expressed willingness to provide capital to enhance UWEC’s revenue base.
21.5 Protected Areas Management and Sustainable Use Project (PAMSU) A contract between UWA and M/S Gauff Ingenieure, Gmbh & Co. KG JBG of Ug.shs.236,160,048 signed on 19th June 2006 for consultancy services exempts the consultants from any form of taxes, duties, levies and other impositions arising.
187 However there is no evidence to show that the tax exemption was approved by the Ministry of Finance, Planning an Economic Development. Accordingly withholding tax amounting to Ug.shs.35,424,007 was not deducted from payments made to the consultants. This implies that UWA did not comply with tax law and risks being penalized by the relevant statutory body.
In his response, the accounting officer explained that he had noted the anomaly with concern and promised to discuss the implication with the consultants with the view of rectifying the problem in order to comply with the statutory requirements.
22.0 ENERGY AND MINERAL DEVELOPMENT
22.1 Support to the Energy Fund Account The Energy fund account operated by the Ministry was not disclosed in the accounts. It was noted that Shs.50 billion was appropriated and released to the Ministry to cater for taxes under Support to Energy Fund. The amount was subsequently transferred to Treasury under the Gross Tax Payment System. However there is lack of clarity on who is responsible for managing the energy fund. Ministry of Finance currently appears to be managing the programme.
The operations of the Energy fund should be streamlined by way of a legal framework and operational guidelines (Regulations).
22.2 Non Deduction and Remittance of P.A.Y.E. Pay As You Earn amounting to Shs.100,799,000 was not recovered from ex-gratia payments of Shs.341,400,000 made to Ministry staff for their contribution to the discovery of oil as required by the Income Tax Act.
Statutory deductions should always be promptly made and remitted to the responsible authorities. 188 The Accounting Officer explained although the Ministry requisitioned for the whole amount including the P.A.Y.E. the Ministry of Finance released only the net amount and that the Ministry had been notified.
22.3 Non-Payment of Hospitality Fees The Ministry charges hospitality fees for storage of non- Government fuel in her Jinja Storage Tanks. However, it was observed that one of the oil companies had not paid hospitality fees to the tune of Shs.90,000,000 in respect of Diesel stored in the tanks and supplied to Aggreko International Projects Ltd to produce thermo power. No explanation was provided by the Ministry for its failure to collect the above revenue. The revenue was also irregularly omitted from the statement of arrears of revenue in the financial statements.
The Ministry is advised to follow up the matter with the oil company.
The Accounting Officer explained that although the oil company was billed for the storage, it was still negotiating with Aggreko to meet the bills since Aggreko had negotiated with Government to offer free storage facilities for its fuel. This is why the bills have not been included in the statement of arrears of revenue in the accounts.
22.4 National Oil and Gas Policy The Ministry has been exploring petroleum in the areas around Lake Albert along the Uganda-Congo border and it was recently confirmed that there is a potential for commercial production.
Upon this confirmation, the Ministry came up with the National Oil and Gas Policy for Uganda, whose goal is to use the country’s oil and gas resources to contribute to early achievement of poverty eradication and create lasting value to the society.
189 The scope of the policy covers all the upstream (including promotion, licensing, exploration, development and production) midstream activities which include transportation and refining of crude oil and gas and downstream activities which include distribution, marketing and sales. It also includes relevant comments on the cross cutting issues regarding managing the social and economic impact of oil and gas activities of the economy and management of revenues accruing from oil and gas policy resources.
However, the policy formulation process and the enactment of the comprehensive enabling law has been slow despite the high speed of developments in this sector.
It is recommended that the Ministry follows up the enactment of a comprehensive National Oil and Gas policy into law.
22.5 Licensing Fees for Oil Exploration The Ministry expects to collect revenue in form of signature bonuses (licensing fees) from about seven exploration firms estimated at about US $ 800,000 out of which US $300,000 relates to the year under review. Signature bonuses for 2004, 2005 and 2006 were estimated at US $200,000, US $300,000, and US $300,000 respectively.
The Accounting Officer has been requested for an update on the performance of this revenue source. A report is awaited.
22.6 Extension of Oil Pipeline A total of Shs.150,000,000 was spent on travel and meetings/workshops in preparation for the extension of the oil pipeline from Eldoret (Kenya) to Kampala (Uganda) through a joint venture between the Kenya/Uganda Government and a private company. Records indicate that the shareholding will be in the ratios of 24½% for each country and 51% for the private company. 190
The Accounting Officer stated that the governments of Kenya and Uganda selected the private company as the investment partner to develop the pipe line project. It was assigned with the responsibilities of selecting of the pipeline route, carrying out engineering design and environmental impact assessment, preparation of all agreements and project documents and seeking legal financing for the project. It was also indicated that when the above responsibilities are successfully completed, the three parties will take the final financing investment decision, incorporate the joint venture and the equity share distribution.
However I have indicated to him that the progress appears to be slow despite the importance of the project to the country. An update on the progress made on the implementation is awaited.
22.7 NORAD Support to Strengthening The State Administration of the Upstream Petroleum Sector in Uganda
(i) Ineligible expenditure It was noted that a total of Shs.14,577,500 was spent on administrative costs, contrary to article IV section 2 & 3 of the Financing Agreement. The Agreement specifies that all administrative costs are the responsibility of the Government of Uganda. This implies that the above expenditure was ineligible for payment using donor funds.
Management explained that the funds were requisitioned for and duly refunded using resources from the Government and that from that time onwards all costs are paid by the Government. I have requested him to avail evidence of refund.
191 (ii) Engraving of Assets It was noted that some assets were not engraved with the project name and unique identification numbers. For example the following assets were not engraved:- Asset name Server and storage tape Dell power vault Gas chromatography This makes it difficult to identify the items in case of loss.
Management explained that this was an oversight and would be addressed.
(iii) Fixed Asset Register It was noted that the Project does not maintain a fixed asset register. The project should maintain an asset register with the relevant asset details.
Management promised to have one opened.
(iv) Bank Reconciliation Statements It was also noted that although bank reconciliation statements are prepared they are not checked by a senior official. This can result into errors and omissions going undetected.
Management explained that the lack of authorization was an oversight and promised to have all the reconciliations endorsed by the Programme Manager.
192 22.8 Sustainable Management of Mineral Resources Project (IDA CREDIT NO.CR.3835-UG; ADB GRANT NO. 2100155003467 And NDF Credit Number 427)
(i) National Social Security Fund (NSSF Contributions) Although deductions in lieu of NSSF contributions by project staff were effected from staff salaries, these were not always remitted to NSSF. Audit noted an amount of Shs.3,759,146 for eight months not remitted.
In addition the employers’ contribution of 10% was also not made during the year under review. The practice contravenes the requirements of the NSSF Act.
Management explained that this was due to the affected staff not having NSSF numbers. Project Management is advised to adhere to the provision of the NSSF Act.
(ii) Pay As You Earn (PAYE) PAYE totalling Shs.15,784,178 were effected from staff salaries but were not remitted to URA.
According to section 136 of the Income Tax Act, the practice can attract interest and penalties.
Management explained that arrangements were being made to remit these funds to URA. Management is advised to adhere to the requirements of the Income Tax Act.
(iii) NDF funding According to the financing agreement, the project was to be funded as follows:-
193 Source Amount (UA) Percentage IDA 17.37 58.6 NDF 4.86 16.4 AFDB 5.35 18.0 GoU 2.08 7.0 TOTALS 29.66 100
However, it was noted that although the project is in its 3rd year of operation it has not yet received any funding from the Nordic Development Fund and this may affect the rate of implementation of project activities.
Management attributed it to delays arising from lengthy procurement procedures and reviews.
(iv) Fixed Assets Management The following fixed assets procured by the project were not included in the fixed assets register:- Kyocera copier km 3035 S/N AJK 3109972 2 Refrigerators GR-231, GR-221 Ergonomic Leather arm chair. 6 Air conditioners. In the absence of a complete fixed assets register it becomes difficult to monitor the use of the project assets.
Management is advised to ensure that in future the fixed assets register is kept up-to-date.
194 (v) Project Staffing It was noted that the following key staffing positions specified under section 4.1 of the Project Implementation Manual (PIP) were not filled during the year:- Deputy Project Coordinator Project Accountant Procurement Specialist Failure to fill all the relevant staffing positions can affect the rate of delivery of project out puts.
Management explained that recruitments were to be discussed during the mid-term review of the Project. Management is advised to ensure that all the required staffing positions are filled.
(vi) Procurement Delayed settlement of an invoice – GOU funding It was noted that was paid US$1,351,738.65 to a company in respect of Airborne Geophysical Survey over selected areas of Uganda from the IDA account. However, this amount represents 90% of the invoice amount (US$1,501,931.83), the balance of 10% was supposed to be paid from the GOU counterpart funds. However, this had not been settled by the time of this audit (November 2007) and may therefore attract a fine of 10% as provided under section 6.5 of the conditions of contract.
Management explained that arrangements were underway to pay the 10 % to the consultants this financial year.
(vii) Status of Implementation of Project Activities Delayed implementation of activities:- It was noted that the following activities included in the work plan for the year under review were not undertaken during the year:- 195 • Air borne Geophysical Data Processing and Interpretation, • Design and Construction Supervision of civil works under SMMRP, • Restoration and Establishment of Laboratories rock storage, rural training centers and Uganda National Seismological network, • Establishment of GIS Internet/ Intranet, • Review and Enhancement of the Legal and Regulatory Framework, • Consultancy for establishment of a Modern Documentation Centre, • Consultancy for Design of Mining Cadastre and Registry System, • Management and Coordination of small Grants Programme, • Design of Institutional Model for DGSM, • Geological Mapping, Geochemical Surveys and Mineral Resources Assessment (funded by NDF), • Geological Mapping, Geochemical Surveys and Mineral Resources Assessment (Funded by IDA), • Establishment of a Minerals Promotion Unit, • Establishment of Environmental and Social Management Framework, • Consultancy for Management of Mineral Resources by Communities, • Consultancy for Monitoring and Evaluation of SMMRP, • Consultancy for Decentralization of Mining Taxes
Failure to accomplish all planned activities may necessitate extension of the project life which may lead to extra administrative costs.
Management attributed the delay to lengthy bureaucratic procedures that require procurement to be subjected to Government and then Bank procedures some of which are not under the direct control of the PCU.
196 23.0 GENDER, LABOUR AND SOCIAL DEVELOPMENT
23.1 Unapproved expenditure A sum of shs.741,113,254 was incurred on three budget lines item over and above the approved budget as follows; Item Amount of over expenditure
Employee costs 16,329,708 Goods and services 389,947,706 Grants paid 334,836,840 Total 741,113,254
Expenditure in excess of approved appropriation may be an indication of breakdown of controls over budgetary expenditure. The Accounting Officer explained that the over-expenditure was due to rent and utilities consumption, workers compensation and transfers to other organisations. She added that the accumulation of arrears was due to difficulty in matching the level of activity with the limited MTEF provided by Ministry of Finance. She also attributed it to increase in tariff rates for utilities.
I advised the accounting officer to regularly carry out trends analyses so as to make proper estimates and to provide authority for re-allocation.
23.2 Procurement of motorcycles and bicycles
Out of Shs.257,577,992 requisitioned from ministry of Finance for procurement of motorcycles and bicycles for the national youth council, Shs.152,967,992 was accounted for leaving a balance of Shs.104,610,992 unaccounted for.
It was also noted that although forty (40) motorcycles were signed for at the Ministry headquarters, there was no confirmation of receipt by the districts. Similarly out of 700 bicycles, 604 were allocated to the districts
197 leaving 96 bicycles worth Shs.9,120,000 un-accounted for. The Accounting Officer explained that some of the funds were used to support operations of the National youth council and for nationwide distribution of the bicycles and motorcycles. However supporting documents were not availed for verification.
23.3 Purchase of Air Tickets
In my last report, paragraph 2, I brought to your attention irregularities in the purchase of air tickets for the officials’ travel abroad. In the year under review, a total of Shs.82,397,962 was paid to the travel agent as at June 2007. However the outstanding bill of USD 16,730 as at June 30th 2007 from a Tour company was not reflected in the accounts and neither were the supporting documents availed for verification. In response management stated that the bill was not included in the payables because of pending reconciliation with the service provider then.
It is recommended that the bill be subjected to an investigation to establish its genuineness.
23.4 Unaccounted for Advances A sum of shs.23,698,000 advanced to various chief administrative officers and an individual to perform official activities remained unaccounted for as follows:- Payee Amount(shs) CAO - Arua 4,400,000 CAO - Katakwi 4,200,000 CAO - Kumi 5,000,000 CAO – Kabale 3,118,000 George Ochieng 6,980,000 Total 23,698,000
198 Non accountability for public funds may imply that funds were not put to proper use. In response the accounting officer explained that a directive had been issued to officers to account. I await for the accountability.
23.5 Support To The Establishment Of The Equal Opportunities Commission Programme (SIDA Funded)
(i) Counterpart Funds According to the Project workplan, the Government of Uganda was supposed to contribute shs.50,000,000 for the period under review. However, only Shs.5,000,000 was released leading to a shortfall of Shs.45,000,000. This resulted into failure to implement the following activities included in the workplan:- • Translation of the 4 legal Rights materials into 6 main dialects for ease of use by the population. • Printing of 10,000 copies of the National Equal Opportunities Policy. • Launching and validation of the data bank on Ethnic minorities. • Dissemination and sensitization of the Public on the EOC Act. • Validation and launching of the human rights mainstreaming strategy into 5 PEAP Priority areas of water, health, education, agriculture, roads and works. • Recruitment of the Members and technical staff of the EOC. • Completion and launching of the Action Plan on the National Equal Opportunities Policy.
Management explained that this was due to budgetary cuts and a constrained ceiling by the Ministry. It was also explained that the Ministry of Finance, Planning and Economic Development had thereafter issued a certificate of financial guarantee equivalent to 3.56 billion for the first 3 years of establishment of the EOC.
199 (ii) General Standards Of Accounting And Internal Controls Fixed Assets Management It was noted that the fixed asset register was not up to date. The motor vehicle Toyota Hilux, double cabin no UG 0182 Y had not been entered in the register at the time of this audit in July 2007. In the absence of an up- to-date fixed asset register, it becomes difficult to verify the existence of the project assets.
Management explained that entries were to be made to the fixed Assets Register.
23.6 UNFPA Funded Projects
The following is a summary of the audit findings, implications and recommendations on some of the control weaknesses identified during the audit of the three Projects funded by United Nations fund for Population Development (UNFPA).
23.6.1HIV/AIDS Component – UGA6R208 Project
(i) Activity Reports It was noted that although activity reports are prepared on execution of activities there was no evidence that a senior independent officer reviews the reports to confirm work done. Control over activity performance and output may not be effectively done. It was recommended that activity reports be reviewed by an independent officer, and evidence of review be indicated in these reports.
Management explained that activity reports are being reviewed and signed by the Project Coordinator, who then forwards them to the Permanent Secretary.
200 Management has been advised to have the documentation ready for my next audit.
(ii) Refund of Unspent Money It was noted that although a declaration of unspent funds had been made in Form D, there was no evidence that the funds (Shs.2,303,1200) had been remitted back to UNFPA. It was recommended that the letters of understanding be adhered to with respect to unutilised funds.
Management explained that the process to refund the money was underway although delayed.
23.6.2Gender Mainstreaming – UGA6G103 (i) Adequacy of the Management Structure The management structure in place is an old structure relating to 2006. Lack of an up-to-date management structure may lead to the project being assessed on the basis of false information. Project management should endeavour to have an updated management structure.
Management explained that the structure will be updated to give an accurate reflection of the current status.
(ii) Activity Reports It was noted that although activity reports are prepared, there was no evidence that a senior independent officer reviews the reports to confirm work done. I recommend that activity reports be reviewed by an independent officer, and evidence of review indicated in these reports.
Management explained that reports are submitted to project oversight managers (Head of Department/Commissioner Gender and the Director Gender). However, the reports are not signed or stamped as reviewed by the oversight managers. This will be addressed.
201
(iii) Refund of Unspent Money It was noted that although a declaration of unspent funds had been made in Form D, there was no evidence that the funds (U.Shs.4,646,867) had been remitted back to UNFPA. It was recommended that the Letters of Understanding be adhered to with respect to unutilised funds.
Management explained that funds are to be refunded to UNFPA after audit verification exercise.
(iv) Accountability Documents for Withholding Tax Payments At the time of the audit some receipt documents for withholding tax payments were not available for verification. Without supporting documents for payments made, there is no evidence to verify that withholding tax was actually paid. Copies of tax payments advice should always be attached to payment documents.
Management explained that all URA receipts are kept in a central depository in the Accounts Section and that the officer responsible was not available at the time of the audit exercise.
23.6.3SGVB Project 102 (i) Adequacy of the Management Structure The management structure in place is an old structure relating to 2006. Lack of an up to-date management structure may lead to the project being assessed on the basis of false information. Project management should endeavour to have an updated management structure.
Management explained that the structure will be updated to give an accurate reflection of the current status.
202 (ii) Refund of Unspent Money It was noted that although a declaration of unspent funds had been made in Form D, there was no evidence that the funds amounting to Shs.1,441,5500 had been remitted back to UNFPA. It was recommended that the Letters of Understanding be adhered to with respect to unutilised funds.
Management explained that the funds are to be refunded to UNFPA after verification by Audit exercise.
(iii) Accountability Documents for Withholding Tax Payments At the time of the audit some receipt documents for withholding tax payments were not available for verification. Without supporting documents for payments made, there is no evidence to verify that withholding tax was actually paid. Copies of tax payments advice should always be attached to payment documents.
Management explained that all URA receipts are kept in a central depository in the Accounts Section and that the officer responsible was not available at the time of the audit exercise.
24.0 UGANDA POLICE
24.1 Construction of Police Forensic Laboratory at Kiswa Police Station Land situated at Bugolobi Plot 142 -162, Spring Road
A local construction company was contracted to handle Phase 1 of (re- roofing) of a project for construction of a modern forensic laboratory at Bugolobi at a contract sum of Shs.99,283,427. A total of Shs.43,723,149.94 was subsequently paid against Certificate No.1. It was however noted that although the previous roof was removed by the contractor, the structure was not re-roofed as per contract. Instead the firm made variations to the original contract that was above the required threshold of 15% by the 203 PPDA citing poor structural works. Due to financial constraints, management changed the plan and decided to instead have the laboratory constructed at Ntinda. Accordingly, another contractor was identified who would have the forensic laboratory and the Quartermaster constructed on Police land in Ntinda under a swap arrangement. The Shs.43 million so far appears to have been wasted.
It was further noted that the land at Bugolobi (Kiswa Police Station) estimated to be 5.98 acres on which the project was going to be constructed is not fenced and much of it has been encroached on by private developers leaving only 3.724 acres. The value of this land and property on it has been valued at Shs.2,937,400,000. The Police Force is in the process of leasing it to a private developer in exchange for a turn key project at Naguru.
In her response the Accounting Officer explained that construction of the laboratory at Bugolobi was halted due to poor structural works which had to be rectified but due to limited funds the works could not be carried out as planned. She also added that they were in the process of having the boundaries of Bugolobi land opened to assist them investigate how the land was encroached.
24.2 Ntinda and Naguru Barracks
(a) Land
An inspection of the Police Housing Estate revealed that the Police Department owns 180 acres of land that comprise Naguru Police College (100 acres), Police Airstrip (62.0 acres) and other 18.39 acres on which quarters are constructed. However, although the title is still intact with no sub-divisions, records indicate that part of the land was given out to UNAFRI by Government upon its establishment in 1989. It was further noted that there is ambiguity regarding the boundaries of the land offered
204 to UNAFRI. The disagreement between the Police Force and UNAFRI has not yet been resolved for a long time despite the intervention of the political leadership. It was also noted that part of the purportedly allocated land to UNAFRI is being used by a Private Company dealing in car business.
I have advised the Accounting Officer to have the matters of disagreement resolved to allow the Police Force plan properly for the redevelopment of the land.
(b) Naguru Barracks
This has structures with tiled and asbestos roofs which are mainly occupied by the Mobile Police Patrol Unit. The buildings are all in a dilapidated state with most of the tiles falling off. The Barracks Administration has lost interest in this unit.
Twelve of the Senior Officers buildings were part of the units given to UNAFRI. However the units appear not to be fully occupied as some of the units were being occupied by private individuals other than officers of UNAFRI.
(c) Ntinda Police Barracks
This comprises a number of housing units with 8 sets of flats units and uniports located at the airstrip and, Amudat Coy, E-Coy, together with a new housing estate built under the hydraform project. Most of the houses are dilapidated with the foundations hanging without verandas. Many units are actually no longer fit for occupation but are still being occupied. There is general congestion in the housing estate with officers and their families sharing accommodation.
205 All the housing units have leakages. The characteristic feature evident in all houses is tar on roof tops and polythene paper supported with stones to prevent leakage.
(d) Imprest
Ntinda Barrack receives imprest of only Shs.600,000 per month while that of Moyo District receives Shs.400,000. This is deemed to be inadequate to handle the many activities including garbage collection, compound slashing, continuous sewage blockages and office running.
(e) Quarter-Guard and Fence
Most of the barracks do not have a quarter-guard and are not fenced. There are a lot of trespassers, who pose a security risk as well as risk of theft of Police and staff property. This was observed at Ntinda Barrack and others around the country.
(f) Police Airfield
What used to be the Police airfield at Naguru is no longer one. It is now an open area with very deep potholes. No clear reasons were given for abandoning such a very important facility.
(g) Sewage System
The sewage system broke down long ago at Naguru and Ntinda Barracks. The system has leakages in most parts of the barracks and is now a health hazard.
A septic tank that had been dug sometime back has never been completed and this poses a risk to staff children and school children in the vicinity. It is not known why the septic tank remained incomplete.
206 (h) Self-Help Projects
It was established that a number of Police Officers at Naguru barrack have constructed their small units from mud and old iron sheets without any plan and this has made the whole barracks appear like a slum in the middle of town. The situation is worsened by a number of pit latrines which are constructed through self help basis by officers without any plan. The living conditions in Naguru barracks are so pathetic that an intervention is needed to avert a possible epidemic.
The Accounting Officer explained that the construction of several pit latrines was a result of the breakdown of the sewer system but plans were under way to overhaul the sewerage system and then dismantle the pit latrines.
(i) Land Encroachment
Most of the land to the Northern part of the Naguru barrack has been encroached on by private developers. The encroachers have erected permanent structures without the knowledge of Police Administration. There is a need to open up the boundaries using the old land title which has no single encumbrance. There is need for a conclusion on Naguru. It is important that the anomalies raised following this inspection be addressed.
24.3 Inadequate Fire Brigade Services
The Fire Brigade Department is charged with a responsibility of emergency handling of fire outbreaks and promoting community safety in the country. It was however noted that despite its critical importance, emergency fire and rescue services coverage in the country is poorly funded. There are only eight operational but poorly equipped fire stations in the country, leaving most of the areas namely; Kasese, Kabale, Arua, Gulu, Lira, Soroti, Moroto, Lugazi, Mubende and Kitgum without such services. Several fire 207 accidents have taken place in these areas and a lot of property and lives of people lost because of lack of fire brigades in these areas.
The funding for the department is too low to allow it operate effectively. For instance the Head Office receives Shs.500,0000 per month as imprest to cater for general office running, servicing of generator as well as maintenance of barracks and fire fighting equipment. The fire fighting equipment requiring repair are just heaped in the store which is dilapidated and also serves as the dormitory and classroom.
There is inadequate protective clothing as the last batch was last bought in 1998. There are no gloves, helmet, face masks and neither are there breathing apparatus. The turn table ladder truck at headquarters bought in 1982 is now too old and both the fire tender and water tanker are grounded.
The Accounting Officer explained that the fire brigade services is a direct responsibility of the Local Governments according to the Local Governments Act but the Uganda Police Force will continue offering the services until the law is harmonised.
24.4 Inspector of Vehicles Testing Centre (IOV Office)
The Centre is located at Jinja road adjacent to Naguru Police barracks. Its main function is to test drivers, test vehicles that get involved in accidents for road worthiness, and general inspection of vehicles. The following were my observations:-
• The available structure was constructed in 1956. No renovation or painting has been done for a long time. There are cracks visible all over the building including the foundation and the roofs are also leaking.
208 There is stench coming from the ceiling as a result of infestation by bats.
• The IOV has no inspection equipment, neither does it have a wheel balancing machine, alignment machine or headlight testers and the officers just view the vehicle from the inspection pit. Therefore, the inspections are done without the aid of specialised equipment meant for the purpose. This poses a risk of passing vehicles that are defective which may also create other risks to other road users.
• The parking yard was full of accident vehicles and some of the vehicles had been parked for more than seven years. Some vehicles came in without any records being made. These vehicles are kept until the cases are concluded by police. Disposal of these vehicles is still difficult because it requires the traffic department to apply for a court order after having advertised in newspapers for vehicles liable for auction.
• The office is currently located on the land estimated to be 2.5 acres with a dilapidated fence, but with no land title. There are plans to have this land swapped with another developer and the IOV section to be relocated to Kigowa area, near the northern bypass.
The Accounting Officer explained that management is in the process of developing a policy for trade in arrangements for turn key projects in respect of prime land to enable the force provide decent accommodation for its personnel.
24.5 Irregularities in Salary Payments
A test check on the police payroll revealed that the force personnel raised several complaints regarding the salary payments. The complaints included among other things non payment of salary since recruitment into the police 209 force (especially for Local Administrative Police), underpayments after promotions and deletion from payroll on transfer to other sections.
The Accounting Officer explained that they were updating the personal records of the affected staff and she attributed the delays to the payroll clearing exercise.
24.6 Audit Inspection Moyo, Lira, Kitgum, Masindi, Nebbi, Arua and Gulu district Police Stations
(i) Accommodation All the police barracks visited are in dire need of renovation as some of them have never been renovated since the colonial period and are in a dilapidated state.
Most of the asbestos roofs are leaking and are held together by stones to prevent them from being blown off by wind. A few units in Gulu have had their roofs replaced with iron sheets. In Pader, the officers have constructed temporary structures being a newly established district station.
The water and sewerage system in all the barracks is no longer functional.
(ii) Office Equipment
All police stations inspected lacked adequate office equipments. For example, in Moyo District, there is no computer and the manual typewriter which was in use was also defective. In Nebbi and Arua, there is neither a fax nor a computer even the radio equipment in use was not functional.
(iii) Imprests District Police Commanders are given imprest of Shs.400,000 per month to cater for general office running i.e. maintenance of barracks, the medical department, stationery and general staff welfare. The funding appears to be too little for efficient and effective management of the district stations.
210 Although imprest is meant for daily office operations, it is also used for civil works like construction of pit latrines and purchase of replacement doors for the housing units.
(iv) Transport Transport was also a major problem to all stations visited. All vehicles in use are very old and cannot be used for major operations given the bad road network in the region and are over due for boarding off. However, of late some districts are now being facilitated with some bicycles and motorcycles although the number is still not adequate.
(v) Staffing The staffing levels are very low. Moyo District, for example, comprises of 6 police posts and 1 police station. The district has many refugee settlements and a population of about 267,000 people but is managed by three staff members per outpost. This has led to each outpost having only one policeman while some outposts are run by SPCs. There is also a need to open another police post in Afoji near the immigration point where a police post once existed.
Delays in payment of salaries were also noted during inspection. For example, in Masindi, Nebbi and Arua, by the time of our visit, salaries for Special Police Constables were in arrears of 3 months, a situation which demotivate staff. The Accounting Officer explained that this is a general problem with all the police establishments, mainly arising from under funding of the budget. She also added that they will review their strategy to improve living conditions of its personnel upcountry.
25.0 UGANDA PRISONS
25.1 Excess Expenditure The financial statements show that Prisons service incurred expenditure of Shs.5,613,376,695 in excess of the approved budgetary provisions. This is 211 attributed to use of Appropriation-in-Aid at source arising from consumption of foodstuffs grown at various stations which expenditure is not appropriated by Parliament.
I did bring up a similar issue to the attention of Parliament in my previous year’s report paragraph 25.2, but to date, no action has been undertaken to address it.
In his response, the Accounting Officer promised to take up the matter with Parliament for regularization.
25.2 Utility Bills A trend analysis for water bills for the main tank at Luzira Prison between the month of July, 2006 and April, 2007 revealed an increased water consumption of 100%. This was caused by the excessive leakage that had been going on for four months uninterrupted, leading to the administration incurring an extra Shs.200 million on water bills. Similarly, the consumption of electricity appeared to be on the high side. For instance, between July, 2006 and May, 2007 the bill for electricity alone amounted to Shs.1,916,117,375. This was attributed to uncontrolled usage on cooking and lighting.
On the issue of escalating water bills, the Accounting Officer explained that the Department had undertaken a replacement of the leaking tank with the assistance from the International Committee of the Red Cross which has drastically reduced the average consumption back to normal. He further explained that mitigating measures such as use of energy bulbs and stoves was being sought.
Proof as to whether mitigating measures had been undertaken and seen to be working is awaited.
212 25.3 Congestion in Uganda Prisons Available statistics indicate that by July, 2007, the total occupancy of the Prisons stood at 11,289 inmates against an approved capacity of 9,428 leading to an occupancy rate of 105%. This is as a result of failure by management to renovate the existing, dilapidated structures throughout the country and construct new ones.
In his reply, the Accounting Officer explained that through the Justice, Law and Order Sector (JLOS), the rehabilitation of Prison units along side the construction of the new ones is being systematically handled.
The Accounting Officer should provide the status report of the interventional measures being undertaken so as to enable me confirm their effectiveness in addressing the problem under review.
25.4 Irregular Contractual Works All contracts should follow established procurement guidelines as provided for by the Public Procurement and Disposal of Public Assets Act. However, examination revealed that a Letter of Credit was opened in Bank of Uganda in favour of a local company to the tune of Shs.22,900,000 for renovation of 7th Street Stores without tendering, bills of quantities and program of works. This omission could lead to settlement of inflated bills by the Department.
The Accounting Officer’s explanation that procedures were followed could not be authenticated due to absence of documentation.
25.5 Irregular Salary Payments Examination of the payroll for the month of October, 2006 together with the Staff List (Nominal Roll) indicated that a total of Shs.20,267,074 was paid to individuals under doubtful circumstances such as deserters (Shs4,553,141), dismissals (Shs.695,183), discharged (Shs.2,068,884), dead (Shs.7,393,961), retired (Shs.4,004,496) and transferred
213 (Shs.1,551,409). However, no explanation was provided to support this irregular expenditure.
The Accounting Officer should provide clarification for paying persons who had ceased being staff of Uganda Prisons and evidence that such cases have so far been deleted from the payroll should be availed for verification.
25.6 Nakivubo Land/Nakasongola Construction Prisons Department swapped its housing quarters at Plot No.33 Nakivubo Road valued at 1 billion with M/s Namayiba Tea Estates. The terms of the swap was for the transferee to construct a Prison unit at Nakasongola equivalent to the value of the property given up. However the following matters were noted:
The contract was not subjected to competitive bidding contrary to procurement regulations. There was also no evidence that Prisons Department participated in the development of the specifications as exemplified by the low height of the structure which was only 3.9 metres.
In his response, the Accounting Officer explained that the construction of Nakasongola Prison had been satisfactorily completed and a “value for value” objective had been achieved. He further explained that all the necessary procedures in support of the contract had been adhered to although the above have not been produced for verification.
25.7 Audit Inspections Audit inspections of Bugungu Young Offenders, Bugungu Youth, Bufulubi, Kitalya, Mubuku, Ruimi, Ibuga, Isimba, Jinja Remand and Jinja Main Prisons was carried out during June and July 2007 and the following were my observations:-
(i) Buildings and Infrastructure
214 The general state of buildings and infrastructure remained very poor. This was attributed to the vandalization during the liberation wars of 1979 and 1986.
In his response, the Accounting Officer explained that through the Justice, Law and Order Sector (JLOS), the rehabilitation of the Prison Units along side the construction of the new ones was being systematically handled.
A status report of the interventionary measures being undertaken is awaited.
(ii) Farm Produce Stores In Bugulubi Prison farm, it was observed that maize grain was being bartered for milling charges in the ratio of 1:1 leading to a loss of Shs.12,912,310. Besides, controls over movement of maize out of the station remained poor.
In his response, the Accounting Officer explained that the practice of bartering maize for milling charges was as a result of breakdown of the tractor operated hammer mill that was being used at the station. However, this financial year, a tractor operated mill is planned to be procured and a new officer in charge has been posted to ensure store controls are adhered to.
The procurement of the hammer mill should be expedited in order to curb the losses currently associated with the barter system of meeting milling expenses.
(iii) Understaffing In all the stations inspected, the ratio of uniformed staff to inmates stood at 1:6 to 1:8 against the recommended 1:3. This issue has always featured
215 in my previous reports to Parliament but little progress is being made to address it.
In his response, the Accounting Officer admitted that understaffing was a general problem in all prison units. However, to address the problem, 700 Prison Warders/Wardresses had been recruited and are under going training in the Prisons Training School. According to him this input is expected to raise the ration to 1:5.
Recruitment of more staff should be encouraged so as to raise the ratio to the recommended levels.
(iv) Encroachment on the Prisons Land All the prisons units inspected, did not have copies of land titles to confirm ownership. Moreover, land purportedly owned was grossly underutilised. As a result, much of this land has been encroached on and in some cases allocated by government to the landless people such as the Basongora Herdsmen. This issue has been featuring in my previous audit reports to Parliament (refer to paragraph 25.9 of 2003/04, paragraph 25.5 of 2005/06 and paragraph 26.6 of 2001/02), though no action appears to have been undertaken.
The Accounting Officer explained that following the recommendations of the Inter-Ministerial Committee of Cabinet, part of Ibuga land was degazetted to settle the Basongora herdsmen. In all other cases, the department was in the process of re-surveying the remaining portions and acquiring their respective land titles.
There is need to obtain land titles to all the land belonging to Uganda Prisons so as to minimize cases of the rampant encroachment.
(v) Transport and Communication 216 It was observed that Katalya and Ibuga prisons did not have any means of transport, while Jinja Remand had an old lorry and pick up which require major overhaul or replacement. This had created difficulties in transportation of prisoners to court and foodstuffs and other essentials to substations.
The Accounting Officer explained that an arrangement exists where nearby stations such as Ibuga prison share vehicles with Ruimi and Mubuku prisons which have brand new Tata Lorries as arrangements are being made to procure their own.
It is recommended that more funds are provided for procurement of vehicles to ease the transport problem that the prison units are faced with.
(vi) Welfare of Staff and Inmates Apart from the inmates of Jinja Main/Remand and Bugungu Prisons who had been facilitated with an additional pair of uniforms from Non Governmental Organisations and Well Wishers, the inmates in the rest of the prisons inspected above had one torn pair of uniforms each.
Furthermore, the prisons staff had one pair of uniforms which was supplied three years ago which had compelled them to supplement with informal attire. It was also noted that inmates had to eat in turns as a result of inadequacy of food bowls and cups. All these are indicators of non- prioritization of welfare of staff and inmates by prisons management.
The Accounting Officer explained that the department had procured prisoners and staff uniforms, food bowls and cups to cover all stations.
(vii) Over-payment to a Contractor for abandoned Project The Prisons department entered into an agreement with a company to construct buildings at Ibuga Prison farm at a contract sum of 217 Shs.517,732,571. Total payments by the time the project was abandoned was Shs.305,840,813 comprising of advance guarantee of Shs.103,546,751 and three certificates of Shs.202,294,062. However, the following matters were noted:- o The advance guarantee of Shs.103,546,751 had not been recovered by the time the contractor abandoned the project. This, if offset by a total of Shs.43,073,987 comprising retention of shs.20,198,987 and materials on site of Shs.23,875,000, would leave an over-payment of Shs.59,472,764. o Similarly, the bank guarantee purportedly from Barclays Bank which was used to obtain an advance of Shs.103,546,751 from prisons was found to be not authentic. o The contract was neither tendered nor cleared by the Solicitor General as required by PPDA Act and regulations.
There is a likelihood of prisons losing Shs.59,472,764 following the disappearance of the contractor from the site.
The Accounting Officer explained that the over payment of Shs.59,472,764 excluded Shs.26,090,422 from two notable items of recovery on advances (Shs.20,709,342) and unpaid works on staff houses and wards (Shs.12,673,000). He further explained that Barclays Bank had been contacted to verify the authenticity of the bank guarantee and if found forged, the matter would be referred to Police. On the issue of the Solicitor General’s clearance, he stated that the contract was approved in line with PPDA although this could not be verified.
The Accounting Officer should provide a status report and feed back from Barclays Bank regarding authenticity of the Bank Guarantee and the steps that have been undertaken to recover the overpayment. Similarly evidence regarding observance of tender regulations should be produced. 218
(viii) Cows Belonging to Private Individuals Out of 263 cows found at Isimba Prison farm, 184 belonged to Government, while the other 79 were for private individuals. Some of the owners of these private cows happened to be prisons senior staff. Meagre resources of the farm had to be diverted for the treatment and general upkeep of this private stock.
The Accounting Officer explained that the owners of the private cows had been directed to remove them from the station, although this is yet to be verified.
26.0 NATIONAL AGRICULTURAL RESEARCH ORGANISATION (NARO)
26.1 Unappropriated Project Funding A total of Shs.13,393,521,369 was received by NARO from various donors during the year. It was however noted that only Shs.4,356,846,700 was approved by Parliament. The balance of Shs.8,856,674,669 is extra budgetary and lacks Parliamentary authority. This funding caused the organization to incur excess expenditure outside the Parliamentary appropriation on various items of expenditure as indicated below:-
Over Item Budget Actual Expenditure Employee costs 11,074,836,000 11,669,877,987 595,041,987 Goods and Services 8,835,648,700 15,835,209,839 6,999,561,139 Consumption of property 1,987,117,000 2,208,019,343 220,902,343
219 This expenditure is extra budgetary and is an indication of a breakdown of controls over budgetary expenditure.
26.2 Staff provident fund The organisation runs a staff provident fund where the employees contribute 5% and the employer 15% of the monthly gross salaries. To date the fund has accumulated deposits to the tune of Ushs 6.1 billion which is invested in long term deposits with various banks. Social security services are a responsibility of the National Social Security Fund (NSSF) in line with section 7 of the NSSF act CAP.222. Although the act exempts some organisations/companies from contributing with the NSSF, NARO has never obtained a Certificate of Exemption to allow it operate its own scheme. The fund is thus being run illegally and could attract sanctions/penalties in accordance with the Act.
In his response the accounting officer stated that they were in the process of registering the scheme under the Companies Act, after which they will seek for the exemption. I still await the outcome.
26.3 Unvouched Expenditure During the financial year a total of Shs.140,237,559 was transferred to the Agricultural Research Information Centre: Shs U shs 44,128,199 being in respect of recurrent while the balance of U shs 96,109,360 was in respect of development expenditure. The entire release was spent by the end of the financial year. However, payment vouchers together with their supporting documentations for payments totaling to Shs 94,498,948 were not availed for audit.
A review of the bank reconciliation statements revealed 3 cheques amounting to Shs.8,173,000 drawn from the bank that were not posted to the cash book while another 3 cheques amounting to Shs.24,400,000 were
220 irregularly posted totalling Shs.8,400,000. These transactions need to be investigated further.
26.4 Unexplained Receipts A review of the bank statement revealed that cash deposits totalling Shs.6,609,000 had been banked on the centre’s bank account during the period of January to June 2007. The sources of these funds were not satisfactorily explained.
26.5 Flouting of PPDA Regulations (i) Procurement of the intercom service at Kachwekano ZARDI The institutes made a procurement of the intercom communication system at Shs.33,960,400 from a firm without going through the normal procurement procedures. Although quotations were received, requests for the quotations were not formally made in writing. Besides, quotations were not subjected to formal evaluation and authority for award was not obtained from a competent contracts committee.
(ii) Procurement of computer servers A contract worth US$82,478 was awarded to a local company for the supply of 22 computer servers. The company supplied servers that did not meet the specifications that were ordered by NARO. Whereas the latter ordered for the PE2800 with Processor Bus Speed of 2x800MHz, the company supplied PE2900 with processor bus speed of 2x667 MHz which speed, as per the System Administrators report, was much slower. The same were however received in the stores and still lack the software for the intended purpose. The servers (18 in number) still lie idle, more than a year after purchase, at the headquarters. With the short life span associated with computer accessories the same are likely to become obsolete before being used.
221 26.6 Unaccounted for funds A total of Shs.31,540,200 advanced to officers to carry out various activities had not been accounted for by the time of this report. In the absence of the accountabilities, I could not ascertain whether the funds were used for the intended purposes or made to the bonafide payees. I advised the accounting officer to enforce timely accountabilities for advances to officers.
26.7 Inspections
26.7.1National Cereals Crops Research Institute (NACCRI)
(i) Hire of grain dryer The institute received a grain drier in 2001 from the IDEA project to enhance the cereals research activities at the station. In August 2001 an agreement was entered into between the institute and an individual to hire the drier for a period of two months effective 29 August 2001 at a monthly rate of Shs.300,000. The dryer was retained by the hirer until February 2008 when it was returned to the institute. However, the dryer was not functional by the time it was returned. Management did not demonstrate tangible interest in the functioning and safety of the dryer, the reason it was abandoned with the hirer for that long. It was also noted that a total of Shs.21,600,000 charged for the period has not yet been recovered from the individual. Management should make efforts to recover the amount.
The Accounting Officer explained that recovery is being handled by NARO Legal Department.
26.7.2National Semi-Arid Resources Research Institute (NaSARRI)
(i) Cotton Ginnery
222 The institute received a cotton ginnery from the Cotton Sub sector Development Programme to improve on the efficiency in the cotton research activities.
The machinery was installed at the station but has not been used/ tested for functionality and still lies idle, depreciating and could have developed some malfunctions in the process. In such circumstances the necessity/contribution of the machinery is put to question and there are also doubts whether proper planning was done prior to the acquisition.
In his response the Accounting Officer stated that the machine is not being used due to insufficient power supply at the institute. To run the machinery would require an additional estimated Shs.40,000,000 to install a transformer. Currently the institute uses the old machinery for the ginning processes whose attendant says its output and quality is inadequate.
I advised the accounting officer to expeditiously source for the required funding to have the ginnery operational so as to avoid loss of the machine due to depreciation and obsolescence.
(ii) Lease of a plot of land to MTN During the inspections it was established that the institute had leased some plot of land to the Mobile Telecommunications Network (MTN) for erection of a transmission mast within the institute land at a premium of Shs.2,000,000 and an annual rental of Shs 1,200,000 effective December 2004. By the time of audit no revenue had been collected. In his response, the Accounting Officer explained that he was in the process of recovering the money.
223 26.7.3National Livestock Resources Research Institute (NaLIRRI) Land encroachment at Lugala substation During inspections it was noted that the land harboring the substation had been massively encroached upon by the local communities estimated at over 2,000 house holds, with a trading centre, landing site and market.
The station is not substantially being used by the institute with 10 heads of animals and no much research activity being carried out.
Management should have the land reclaimed and surveyed to protect it from encroachers.
26.7.4National Forestry Resources Research Institute (NaFORRI) Hire of Sawmill The institute purchased a mobile circular sawmill to enable it carry out research demonstrations and some commercial activities. To enhance its mandate and benefit clients, the Saw Mill was contracted out to National Forestry Authority (NFA) under a ‘Memorandum of Understanding’ at a fee of Shs.6,000 per cubic metre of logs harvested and delivered at the mill site. In addition, while at the NFA, the mill was to be used by the institute in carrying out logging and saw milling studies.
By the time of this report there was no evidence of collection of revenue from NFA. Equally, application of the mill for research purposes was not evident.
27.0 NATIONAL AGRICULTURAL ADVISORY SERVICES (NAADS) 27.1 Background of the Programme In the fight against poverty, the Government of Uganda put in place the Poverty Eradication Action Plan (PEAP) as a framework go guide sector planning. Under PEAP the Plan for Modernization of Agriculture (PMA) was
224 designed to provide guidelines for the transformation of agriculture from subsistence to commercial agriculture.
Consequently, NAADS programme came into being under an Act of Parliament known as the National Agricultural Advisory Services Act, 2001 as one of the seven (7) components of the PMA. The overall goals of the programme are to improve the productivity and livelihoods of Ugandan farmers through the establishment of a farmer-led and contract based agricultural advisory service.
A programme support document was signed in November, 2001 with the following donors:- • The World Bank through the intermediary of the International Development Agency (IDA) • The European Union (EU) • The Netherlands • The Danish International Development Agency (DANIDA) • The Irish Aid • The International Fund for Agricultural Development (IFAD) An audit of the programme was under taken for the year ended 30th June 2007 and a separate audit report issued. Here below are the summarised findings that were brought to the attention of management:-
27.2 Secretariat
27.2.1Findings relating to the financial statements
27.2.2Basket Funds Statement
225 The Basket Funds Statement does not reconcile with the receipts and payments accounts in both prior year and current year by shs.40,030,000 and shs.22,121,000 respectively.
This implies that the Basket Funds Statement and Statement of Fund Balance may not present fairly in all material respects of the Funds received and expenditure incurred as at 30th June 2007.
Programme management should provide a reconciliation statement between the Basket Funds Statement and the Receipts and payments account regularly.
Management has explained that the differences arise from the end of year balances on the project accounts which were in operation when the programme was being financed through the project mode. A reconciliation of the balances on the two statements will be provided to the audit team for review.
27.3 Compliance with the Memorandum of Understanding and the laws and regulations of the Government of Uganda
27.3.1Withholding tax Withholding tax totaling to shs.4,937,650 was not deducted from various payments to service providers.
This contravenes the MoU and GoU regulations.
Programme management should ensure that all WHT is appropriately deducted from all applicable expenditure that is incurred. 27.4 Findings relating to the Internal Control System.
27.4.1Verification by the internal auditor
The following expenditure was not verified by the internal auditor:-
226 Date Voucher # Amount Payment Details Ushs 20/12/06 Rs 82 9,466,832 Payee on gratuity of Cate Kiisa, Jenifer, Peter & Barbara 28/05/07 D29 3,384,000 Supply of 45,000 suckers of pineapples to Butumbule S/C 22/12/06 Rs 81 23,582,436 PAYE for December 2006 13/10/06 Rs 63 4,916,882 Payee on leave pay for Dr Silim Okecho & Agnes 13/10/06 Rs 62 4,314,368 Payee on Dr. Onyokos gravity 30/10/06 D82 1,410,800 Funds for photo coping print and binding documents in color. 22/22/06 Rs 38 13,131,633 NSSF contribution for month December 2006 19/09/06 Rs 106 2,738,510 Loading of fuel cards 19/09/06 R91 3,592,000 Loading of fuel cards
This contravenes the financial management manual guidelines and may lead to ineligible expenditure being incurred
Programme management should ensure that all expenditure is verified by the internal auditor before expenditure is incurred.
Programme Management explained that internal audit department endorses all payments. These isolated cases came because at times the auditors are out of station undertaking quality assurance in the districts. As a corrective measure, the vouchers have been passed to the auditors for endorsement. 27.5 Findings relating to compliance with the MoU and other GoU regulations - Districts
27.5.1Co – funding obligations
The following districts did not comply with their co – funding obligations:-
District Expected Co Actual Co – funding Variance – funding UGX UGX UGX Abim 4,512,000 1,350,000 (3,162,000) Amolatar 4,427,000 2,500,000 (1,927,000) Bududa 3,097,000 3,030,000 (67,000) 227 Busia 5,263,160 1,000,000 (4,263,160) Hoima 7,726,950 5,620,040 (2,106,910) Kabarole 6,155,650 5,875,000 (280,650) Kamuli 8,437,750 1,810,000 (6,627,750) Kasese 4,407,050 - (4,407,050) Kotido 6,050,000 3,356,000 (2,694,000) Luwero 4,479,000 1,030,000 (3,449,000) Lyantonde 2,744,300 2,530,350 (213.950) Manafwa 2,844,500 2,155,500 (689,000) Masindi 3,464,000 2,000,000 (1,464,000) Moyo 4,830,000 1,850,000 (2,980,400) Nakapiripit 4,296,000 3,000,000 (1,296,000) Namutumba 5,000,000 2,050,000 (2,950,000) Nebbi 4,448,000 30,000 (4,418,000) Sembabule 4,550,000 1,000,000 (3,550,000) Soroti 10,134,000 5,247,735 (4,886,265) Tororo 4,504,000 - (4,504,000) Yumbe 4,710,000 500,000 (4,210,000) 106,080,360 45,934,625 (60,145,735)
Non – compliance with the co – funding requirements impairs the available resources for the programme and therefore affects its implementation.
Programme management has attributed the low co-funding to low revenue base and failure by government to remit graduated tax compesation funds to local governments.
27.5.2Withholding tax
The following districts did not remit 6% withholding tax to the Uganda Revenue Authority in relation to payments regarding professional services that were above Ugx 1,000,000.
District Payment Details Amounts UGX Gulu 04/05/07; Voucher # 005/05; Chq # 1,692,560 5258; Impulse communications. Hoima and All payments - Kasese
228 Nebbi 30/01/07, Vr. No, 016/01, chq. No 1,419,000 5089 Dr. Okwir Anthony; Payment was made in respect of publication of NAADS activities by M/s Impulse Communication Options Ltd, but the payment voucher was made in the names of the District NAADS Coordinator. 3,111,560
This contravenes the Income Tax Act, 1997.
Programme management should ensure that 6% withholding tax in relation to payments that are above Ugx 1,000,000 regarding professional services is regularly remitted to the authorities.
Management explained that it was an oversight on their part not to deduct the 6% WHT and indicated that they are going to make a claim from the respective suppliers to remit the taxes to URA.
27.5.3Release of funds
Funds were released and received late in the following districts as indicated below:-
District Quarter Date received Amuru First Quarter Did not receive funds in this quarter. Kayunga First Quarter 11/10/2006 Kayunga Second Quarter 14/02/2007 Kayunga Third Quarter 15/02/2007 Kayunga Forth Quarter 08/06/2007 Kasese Second Quarter 22/11/2206 Kasese Third Quarter 07/02/2007 Mityana Second Quarter 22/11/2006
The implication is that implementation of the programme activities becomes difficult within the required timeframe.
229 GoU in liaison with the MFPED should ensure that timely release of funds to the districts is made so as to ensure timely implementation of programme activities.
Management has explained that in some districts, the money delayed on the district collection account and hence could not get the funds into the District NAADS A/C.
Management also indicated that the matter will be handled with the Ministry of Finance Planning and Economic Development.
27.5.4Statutory deductions
The following districts did not remit statutory deductions within the required statutory timeframe. District Month Statutory Date remitted deduction Bugiri July, August’ 2006 NSSF October 2006 Kabarole July ‘2006 to February NSSF 28th June 2007 ‘2007 Kamuli September ‘2006 PAYE No proof of remittance Kasese June ‘2006 to August NSSF Not remitted ‘2006 Kibaale July’ 2006 to February’ NSSF 22nd March 2007 2007 Kyenjojo April, May and June’ 2007 Wrong computations Kaabong November – June PAYE Not remitted Kaabong November – June NSSF Not remitted Mityana June 2007 WHT 10thAugust 2007 Nakaseke September ‘06, October’ NSSF 30th April 2007 06, November’ 06, December 06, January’ 07 and February ‘07. Sembabule August 2006 (Ugx WHT 20th September 283,320) WHT 2006 March 2007 (Ugx WHT 30th April 2007 1,222,949) 26th September June 2007 (Ugx 338,100) 2007
230 Non – compliance with statutory requirements may result into penalties thereby increasing the implementation costs of the Programme.
Programme management should ensure that all statutory deductions are remitted within the required statutory timeframe.
27.5.5Sub - counties
27.5.5.1Co – funding obligations
It has been noted that out of the expected co-funding of Shs.472,741,631 from Sub - counties and Farmers’ forums in the respective sub – counties, only shs.213,772,617 was realized leading to a variance of shs.258,969,014. Many Sub-counties and farmers forums did not comply with their five did not comply with their five percent (5%) and two pecent (2%) co – funding obligations.
Non – compliance with the co – funding requirements impairs the available resources for the programme and therefore affects its implementation.
Programme management should ensure that co – funding is adhered to regularly.
27.5.5.2 Withholding tax
Four sub - counties did not remit 6% withholding tax totaling shs.626,246 to the authorities in relation to payments regarding professional services and goods that were above Ugx 1,000,000. This contravenes the Income Tax Act 1997.
Programme management should ensure that 6% withholding tax in relation to payments that are above Ugx 1,000,000 regarding professional services is regularly remitted to the authorities.
Management has promised to address this issue in the general circular to be issued to all the participating districts and subcounties.
231
27.5.5.3 Release of funds
Funds were received late in most sub – counties. Implementation of the programme activities becomes difficult within the required timeframe.
GoU in liaison with the MFPED should ensure that timely release of funds to the districts and respective sub – counties is made so as to ensure timely implementation of Programme activities.
Mangement has explained that it’s the transfer systems and bureaucracies within the districts that cause the delay to transfer funds to Sub-counties.
27.6 Internal Control System
27.6.1Districts
27.6.1.1Programme Governance
District authorities transfer Sub County Chiefs and sub accountants regularly and there is no formal handover of NAADS activities to new officers.
The practice leaves a lot of uncompleted assignments in the S/Cs and Districts and the new appointees face a lot of problems to complete the assignments. This often resulted into disclaiming responsibilities over issues raised.
Programme management should ensure that all authorities that are responsible for the financial period under review are available at the audit site during the audit exercise and formal handover reports should be prepared to enable a smooth tracking of NAADS activities.
232 Programme management has explained that It’s the mandate of the districts to transfer its staff. What they have always advised is that the technical staff should be transferred within sub-counties participating in the NAADS Programme. Management will emphasise this recommendation including proper handover processes in a general circular to the all participating districts.
27.6.1.2Bank reconciliations
The following districts did not have their reconciliations approved by the District NAADS Coordinator (DNC) and CAO.
District Hoima Kyenjojo Masindi
None approval of bank reconciliations results in a breakdown in a vital internal control system and could result in errors and frauds remaining undetected.
Programme management should ensure that bank reconciliations are regularly reviewed and approved by the DNC and CAO.
Management has agreed with the recommendation. It is however an improvement in that previously, reconciliations were not being made and reviewed by the authorities. This is one of the issues to be emphasized in the Limited audit exercises.
27.6.1.3Asset register
The following districts did not have and / or maintain an asset register for NAADS Programme assets.
District Bugiri, Busia, Butaleja, Hoima, Iganga, Kaliro, Kamuli, Luwero, 233 Namutumba, Pallisa and Tororo.
An asset register enables the tracking and safe use of assets and recovery of assets becomes difficult in case of theft and burglary.
Programme management should ensure that a separate assets register in relation to NAADS assets is initiated and regularly maintained.
Programme Management noted the recommendation and promised to have the assets registers maintained.
27.6.1.4Asset engraving
The following districts did not engrave their NAADS assets.
District Assets not engraved Busia Sony Video Camera Butaleja Sony Digital Camera Lyantonde 1 Table, 1 Exc. Arm chair, 6 Metallic chairs Masaka Filing cabinet and chairs Tororo Sony Video Camera, Still Camera, Sony Digital Camera, Tape Recorders and Scanner.
Recovery of assets becomes difficult in case of theft and burglary.
Programme management should ensure that all porgramme assets are engraved by the programme initials, names and unique identification numbers.
Programme Management noted the recommendation and promised to have the assets engraved.
27.7 Vehicle fleet management
The following districts either did not have log sheets to record vehicle movements or the log sheets were inaccurately recorded.
234 District Issues raised Bugiri, Iganga, Kamuli and Tororo. No log sheets There is no basis to ascertain whether or not all movements of the vehicle and the related maintenance costs were for the benefit of the project.
Log sheets should be introduced and particulars of movement of vehicles accurately recorded regularly.
Programme Management noted the recommendation and promised to have logsheets introduced and maintained.
27.8 Quarterly Internal Audit Reports
Quarterly internal audit reports were not availed to us for our review in the following districts and / or the frequency with which internal audit was carried out was insufficient as disclosed below.
District Dates of Number internal of visits audit visits Abim, Amolatar, Amuru, Busia, Kaberamaido, Not Kaabong, Kaliro, Kamuli, Kotido, Namutumba, disclosed Maracha-terego, Masindi, Moyo, Pader, Yumbe. Kabarole Not 1 disclosed
We were unable to ascertain whether the internal auditors’ recommendations were implemented in the period. Insufficient visits by the internal audit results into the programme misallocating funds since the provision of checks and balances is being eroded.
Programme management should ensure that internal audit reports are filed and made available to external independent reviewers.
27.9 Procurement reports
235 Procurement report were either not prepared in accordance with the NAADS approved format or not availed to us for review in the following districts.
District Issues raised Amuru and Report was not prepared in accordance with the NAADS Luwero approved format. Gulu, Procurement report and procurement plan were not Kasese and prepared. Pader. Kayunga, Report was not availed to us for review. Moyo and Mubende.
Non – compliance with the NAADS financial management guidelines renders them worthless and impairs the control objectives and Programme monitoring.
Programme management should ensure that procurement reports are prepared in accordance with NAADS financial management guidelines and are always made available to independent external reviewers.
Programme management has indicated that there are two issues to this. One is the limited capacity pertinent with local governments. This issue is being addressed through the trainings undertaken during the limited audits in addition to recent recruitment of professional procurement officers in local governments to backstop this process. However, the rampant transfers affect this cause. Two has been enforcement. However, of late they have requested all districts/sub-counties to file procurement plans for the year and every quarter. Reporting after making a plan becomes easy. This will be enforced.
27.10 Status of accounting records and bookkeeping
It has been noted that at least 21 districts either had incomplete financial reports or did not prepare financial reports.
236 This renders the audit trail difficult and we were unable to verify the validity, accuracy, existence and completeness of the expenditure incurred and /or income received.
Programme management should ensure that all required reports are prepared regularly in accordance with the financial management guidelines issued by the NAADS Secretariat.
Programme management has indicated that it will follow up the matter.
27.11 Stamped “PAID”
Payment vouchers were not stamped “PAID” in at least 12 districts.
Payment vouchers and supporting documents can be presented more than once for payment resulting into misallocation of funds.
Programme management should ensure that all payment vouchers and supporting documents are cancelled with stamped “PAID” on initiation of payments.
Programme management has indicated that it will follow up the matter.
27.12 Unreconciled amounts
The financial report did not reconcile with the activity analyzed expenditure report in the following districts.
District Payment Amounts as Amounts as Difference Details per the per the financial activity report analyzed 237 expenditure report UGX UGX UGX Kayunga 293,527,554 291,288,941 2,228,613 Kibaale 118,586,128 116,944,458 1,641,670 Manafwa Agric- 8,943,400 3,556,000 5,387,400 business and market linkage Manafwa Agric- 7,036,400 3,010,000 4,026,400 business and market linkage Mbale NAADS 4,201,500 5,670,000 (1,558,500) District NAADS coordinator Mbale FID normal 1,688,750 1,010,000 (678,750) NAADS 433,983,732 421,479,399 12,504,333
We were unable to verify the validity, accuracy, existence and completeness of Ugx 433,983,732 disclosed in the report. Ugx 12,504,333 was either misallocated or misappropriated and is considered to be ineligible expenditure.
Programme management should ensure that the financial report regularly reconciles with the activity analyzed expenditure report.
Programme management has indicated that the issue will need to be verified to the cashbook and the reports. It is possible that this is an issue of capacity.
27.13Inadequately supported amounts
238 The financial and the activity analyzed expenditure report amounts did not reconcile with third party supporting documents in 18 districts by a variance of shs.57,160,260.
I was unable to verify the validity, accuracy, existence and completeness of shs.57,160,260 and/or shs.57,160,260 was either misallocated or misappropriated.
Programme management should ensure that amounts disclosed in the financial and activity analyzed expenditure reports regularly reconcile with third party supporting documents.
Programme management has indicated that Districts/sub-counties with missing accountabilities will be requested to provide them or the respective officers will be requested to refund the money to the programme.
27.14 Authorization by the NAADS Coordinator
The following expenditure was not approved or authorized by the NAADS coordinator in the following Districts.
District Expenditure details Luwero Voucher / Date Amounts Payment Details Cheque # UGX 5579 945,000 Supply of fuel to the NAADS programme
Ntungamo 1/1 02/01/07 915,000 Muyambi.S.K; Financial audit of sub - counties
Ntungamo 25/3 29/03/200 300,000 Alex Ampairwe; Allowance for 7 March to Intern
Soroti 102487 30/06/07 23,770,000 Construction of a sweet potato prcessing plant
Expenditure that does not achieve value - for - money of the programme could be incurred resulting into misappropriation of funds.
239 Programme management should ensure that all expenditure incurred in the implementation of the programme is approved or authorized by the NAADS coordinator.
27.15 Sub - counties
27.15.1Quarterly Internal Audit Reports
Quarterly internal audit reports were not availed to us for our review in 28 sub - counties and / or the frequency with which internal audit was carried out was insufficient.
We were unable to ascertain whether the internal auditors’ recommendations were implemented in the period. Insufficient visits by the internal auditors results into the programme misallocating funds since the provision of checks and balances is being eroded.
Programme management should ensure that internal audit reports are filed and made available to external independent reviewers. District internal auditors should visit the sub – county on a quarterly basis.
27.15.2Procurement procedures
It has been noted that at least 63 sub - counties did not comply with the required procurement procedures during the implemtation of the activities for the Technology Fund.
Ineligible expenditure could be incurred. Non – compliance to the procurement procedures results into misuse of programme funds and eventual withdrawal funding by participating partners.
Programme management should ensure that all procurement procedures are adhered to regularly through out the financial period.
240
27.15.3 Procurement reports
It has been noted that at least 38 sub - counties either had an incomplete procurement reports or did not prepare procurement report
This renders the procurement procedures’ audit difficult and we were unable to verify the validity, accuracy existence and completeness of the procurement expenditure incurred.
Programme management should ensure that a procurement report is regularly prepared in accordance with the procurement guidelines issued by the NAADS Secretariat.
27.15.4Status of accounting records and bookkeeping
It has ben noted that atleast 73 sub - counties either had incomplete financial reports or did not prepare financial reports.
This renders the audit trail difficult and we were unable to verify the validity, accuracy existence and completeness of the expenditure incurred or income received.
Programme management should ensure that all required reports are prepared regularly in accordance with the financial management guidelines issued by the NAADS Secretariat and should be consistent with each other. The management should ensure that the internal control system is effective and efficient throughout the period under review.
Programme management has indicated that the issue of capacity in bookkeeping and reporting is still a challenge under lower local governments. This issue is being addressed through continuous training under limited audits and our recent printing of user friendly combined 241 Cashbooks / Activity analysis Books is expected is expected to minimize reporting errors and mistakes.
27.15.5 Release advises
The following sub - counties did not disclose to us the release advises in the respective quarters below.
District Sub – county Quarters Luwero Bamunanika April – June’ 2007 Masindi Nyangahya October – December’2006, January – March’2007. and April – June’ 2007. Nakaseke Kapeka October – December’2006 and April – June’ 2007 Nakaseke Ngoma In all quarters. Nebbi Kango 1st Quarter Nebbi Erussi 1st Quarter
We were unable to verify the validity, accuracy existence and completeness of the funds received in the sub – counties during the period.
Programme management should ensure that release advises are regularly collected from the District and made available to independent external reviewers.
Programme management has indicated that whenever funds are released, the Secretariat generates release advises that guide the districts on how to distribute the Programme funds. The office of the District NAADS Co- ordinator is expected to ensure that each respective sub-county is issued with the advice to ensure proper appropriation of programme funds. This issue will be emphasized in a general circular to districts on implementation of Audit recommendations.
27.15.6Unreconciled amounts
242 It has been noted that the financial report did not reconcile with the activity analyzed expenditure report by a total of shs.10,571,896 in 12 sub – counties as shown below:-
District Sub – Amounts as Amounts as Difference county per the per the financial activity report analyzed expenditure report UGX UGX UGX Bushenyi Kabira 10,595,620 6,649,690 3,945,930 Bushenyi Kabira 3,561,000 5,977,130 (2,416,130) Bushenyi Kabira - 2,498,100 (2,498,100) Bushenyi Kabira 9,523,681 12,689,836 (3,166,155) Ibanda Bisheshe 10,833,700 13,825,400 (2,991,700) Ibanda Bisheshe - 9,523,950 (9,523,950) Ibanda Bisheshe 9,825,900 12,014,950 (2,189,050) Ibanda Bisheshe 3,258,050 1,069,000 2,189,050 Kibaale Bwamiramira 121,416,209 119,966,209 1,450,000 Kiruhura Kashongi 3,309,000 1,608,000 1,701,000 Masindi Nyangahya 56,611,737 56,482,937 128,800 Mukono Ntenjeru 93,712,480 69,770,279 23,942,201 322,647,377 312,075,481 10,571,896
I was unable to verify the validity, accuracy, existence and completeness of shs.322,647,377 disclosed in the report. In addition, shs.10,571,896 was either misallocated or misappropriated and this could considered to be ineligible expenditure.
Programme management should ensure that the financial report regularly reconciles with the activity analyzed expenditure report.
Programme management has noted that this issue is more of capacity to reconcile records than fraud. The problem of reconciling reports and financial records will be minimized by the use of the new analysed cash/ activity analysis books. District internal auditors will be required to verify the accuracy of the reports.
27.16 Inadequately supported amounts 243
The financial and the activity analyzed expenditure report amounts did not reconcile with third party supporting documents in a total of 76 sub – counties by a total of shs.227,422,260
This amount was either misallocated or misappropriated and could be considered to be ineligible expenditure.
Programme management should ensure that amounts disclosed in the financial and activity analyzed expenditure reports regularly reconcile with third party supporting documents.
Programme management has noted that the respective entities will be requested to provide proper accountability for the advances. Respective officers will be requested to refund monies where they fail to account for the advances.
27.17 Bank reconciliation statements
Bank reconciliation statements were either not accurately prepared or approved in the following sub - counties.
District Sub – county Issues Gulu Koch - Ongoko The balance as per cash book indicated in the bank reconciliation statement of Ugx 3,830,720 is different from amount Ugx 4,329,720/= contained in the cash book availed to us. Ibanda Kikyenkye Cheque 5080 of Ugx. 6,937,000 bounced during the month of June 2007 and was not reversed in the cashbook but was instead included under uncredited cheques in the bank reconciliation for June. Kabale Rwamucucu Apart from the month of June 2007, Monthly maziba bank reconciliations do not bear evidence of Hamurwa internal audit checks and reviews.
Kabarole Kisomoro Bank reconciliation statements were not approved by the Sub-county chief. 244 Kyenjojo Bugaaki Bank reconciliation statements were not approved by the Sub-county chief. Kumi Atutur The bank reconciliation statement reflected a cash balance of Ugx 20,319,861 which was not correct. The cheques reflected in the reconciliation as unpresented were never issued out to the recipients. They remained in the cheque book were availed to us during the audit on 8/03/07. The cheques were as follows; Cheque no: 5111 Ugx 1,071,600, Cheque no:5113 Ugx 6,768,000 and Ugx 432,000,In total they amount to Ugx 8,321,600/=
The true cash book balance should be Ugx 28,641,461. Masindi Nyangahya There is no evidence that the bank reconciliation statements were either approved by the SNC or the sub – county chief. Masindi Nyangahya The bank reconciliation statement had an uncredited deposit Ugx 680,000 which was more than six months old. It could only be traced to the bank deposit slip of 20th March 2008. Nakaseke Kikamulo There is no evidence that the bank reconciliation statements were either approved by the SNC or the sub – county chief.
Nakaseke Kinyogoga There is no evidence that the bank reconciliation statements were either approved by the SNC or the sub – county chief.
Oyam Iceme Book balance was Ugx; 15,645,000 but Ugx, 18,613,800 was used as a closing cashbook balance in the bank reconciliation statement. There was no explanation for the variance of Ugx 2,968,800 Rukungiri Nyakishenyi The 2% farmer contributions received by the sub county in cash were not banked Kagunga immediately so reconciliations between bank statements and cash book entries could not easily be matched.
245 Non – review of bank reconciliation statements by responsible officials and delayed postings of reconciling amounts results into misappropriation of programme funds.
Programme management should ensure that all bank reconciliation statements are reviewed by a responsible official and reconciling items that are more than six months old are reversed immediately as soon as the requirement appears.
Management has noted the recommendation and promised to address the matter in future.
27.18 Assets register
The following sub – counties neither had nor maintained an asset register.
District Sub – county Hoima Buhimba Luwero Katikamu Masaka Bigasa Mukono Ntenjeru Wakiso Masulita
Recovery of assets becomes difficult in case of theft and burglary.
Programme management should ensure that a separate assets register in relation to NAADS assets is initiated and regularly maintained.
Programme Management has noted the recommendation and has promised to ensure that the fixed asset register for NAADS is put in place. 27.19 Asset engraving
It has been noted that at least 25 sub – counties did not engrave their assets.
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Recovery of assets becomes difficult in case of theft and burglary.
Programme management should ensure that all porgramme assets are engraved by the programme initials or names.
Programme management has promised to address the matter in future.
28.0 JUDICIARY
28.1 Extra Budgetary Funding
The Judiciary received Shs.6,253,792,706 in extra budgetary funding from Danida, European Union and USA which was not appropriated by Parliament as required by law. The approved budget shows that US$ 802,300 equivalent to Shs.1,509,688,000 was appropriated as funding from Danida. However, Shs.6,121,603,706 was instead received leading to an extra budgetary funding of Shs.4,611,915,706 which lacked approval of Parliament. The department also received extra budgetary funding of Shs.132,189,000 from the European Union and United States of America (USA) which is yet to be accounted for.
The Accounting Officer, explained that of the extra budgetary funding of Shs.4,611,915,706, Shs.1,559,528,932 was the balance brought forward from the previous year.
I have explained to him that balances rolled over to the new financial year also require Parliamentary appropriation.
28.2 Emoluments (a) Salary and allowances paid to a Retired Judge
247 Salary and allowances totalling to Shs.37,152,000 were paid to a retired Judge for a period of five and eight months respectively after retirement in contravention of government regulations. This anomaly was caused by weaknesses in the payroll management procedures which allow the department to operate two parallel payroll systems.
The Accounting Officer promised to recover the funds from the Judge’s gratuity payment. I await the recovery.
I have advised the Accounting Officer to streamline the system by transferring all staff to the computerised payroll managed by the Uganda Computer Services.
(b) Emoluments paid to a Judge during un approved study leave
A judge was paid full annual salary, housing and medical allowances totalling Shs.61,380,000 and provided a fully fuelled vehicle while on an unapproved study leave abroad. In response the accounting officer stated that the error was regrettable and a letter had since been written to judicial service commission to regularize the study leave.
28.3 Payables Note 26 (Payables) to the accounts, shows a balance of Shs.693,680,351 as miscellaneous account payables balance. However, the relevant documentation in support of this figure was not presented for verification. In the same Note, Shs.211,970,708 is reported as withholding tax payable. This balance is not supported with any cash balances from the cash balances shown in Note 20 implying that money was utilised at source contrary to the tax law. 28.4 Bank Reconciliation
248 The bank reconciliation statement for the expenditure account indicates an amount of Shs.190,394,366 representing credits in the bank but not in the cash book. However this could not be verified due to lack of supporting documentation.
28.5 Accounting for Deposits Apart from the Kampala High Court and Commercial Court deposits of Shs.3,158,234,744 derived from hearing of civil cases, all other court deposits were not reported in the financial statements. The courts whose deposits were not reported include Court of Appeal, Supreme Court, High Courts of Jinja, Mbale, Soroti, Gulu, Arua, Fort Portal, Mbarara, Masaka, Nakawa and all chief Magistrates courts countrywide. This practice led to an understatement of deposits in financial statements.
The Accounting Officer explained that he had written to all stations to file statements of amounts outstanding.
28.6 Administration/Management of Cash Bails and Fines Imposed after Banking Hours
Existing Government Non Tax Revenue regulations require that court fees, fines, licenses and deposits should be paid to URA through designated commercial banks. However, government offices close business at 5.00 p.m. as opposed to banks which close at 3.00 p.m. There has been a public (legal community) outcry whereby convicts fined and suspects granted bail outside banking hours are greatly inconvenienced and are denied their judicial rights of being released as fines and bail deposits can not be banked accordingly.
The Accounting Officer is advised to liaise with the Secretary to the Treasury and the Uganda Revenue Authority to work out a suitable arrangement to ensure that people’s rights are not violated.
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28.7 Banking of Non-Tax-Revenue A sum of Shs.33,723,461 was received as NTR collected by upcountry courts in cash by the cashier at High Court. However, only Shs.28,517,909 was banked on the revenue account in Bank of Uganda leaving a balance of Shs.5,690,002 not banked and therefore un-accounted for.
In addition, Shs.4,918,410 collected as unpaid salaries was also not banked.
The Accounting Officer explained that the money was borrowed and used at source and that it will be refunded from Judiciary monthly releases.
28.8 The Library Fund
A library fund is operated by the Judiciary without authority of the Minister responsible for Finance contrary to Section 9(3) of the Public Finance and Accountability Act. The bank statement for the account showed a credit of Shs.6,936,198 as at 30th June 2007. However I was not presented with the statements of receipts and expenditure for the fund. I was therefore not able to ascertain and satisfy myself that all receipts are brought to account and spent in accordance with the regulations.
The Accounting officer explained that approval of the fund by the Minister has been sought.
28.9 Audit inspections
Audit inspections revealed failure by courts to maintain proper records of Non Tax Revenue, warrants of commitment to prison, poor state of court prison cells and lack of exhibits register as shown in the table below;
250 S.no Inspected Audit findings Remarks court 1. Mbale Chief a) Lack of Accountability lacking. magistrate’s acknowledgement receipts Court for NTR of Shs.15, 025,000. b) Lack of exhibits register. 2. Mwanga II a) Court cells: Men are Poor accommodation Court kept in a metallic container is a health hazard and with poor ventilation while amounts to human women are in a wooden rights violation. structure. 3. Nabweru a) No evidence of payment Accountability lacking. Court of fines or warrant of commitment to prison in default.
Management should ensure that there are proper record keeping systems at courts of law and that court cells are in a proper state.
29.0 DIRECTORATE OF PUBLIC PROSECUTION (DPP)
29.1 Contract Staff The Directorate has a number of contract staff many of whom are stationed upcountry. They are paid wages locally since they are not on the traditional Public Service payroll.
The Accounting Officer explained that contract staff are a result of the delays in the recruitment process between the Ministry of Public Service and Public Service Commission. It was further explained that the Directorate makes declarations of vacancies and request for staff but few are approved and this forces them to recruit temporary staff to ensure continuity in service delivery.
I have advised the Accounting Officer to have their appointments regularised by the Ministry of Public Service.
251 29.2 Non compliance with work plan. Under the Northern Uganda Post War Recovery Plan, the Directorate received a total of Shs.192,351,000 to carry out various activities. According to the work plan Shs.10,541,000 and Shs.12 million was earmarked for recruitment of staff and purchase of solar panels respectively. However examination revealed that the two activities were not implemented according to the work plan as indicated below:-
a) Recruitment of staff Where as Shs.10,541,000 was released to the directorate to recruit 8 state attorneys, 8 state prosecutors and 24 support staff under the Northern Uganda Post war recovery plan, the funds were utilised on transport allowances to newly appointed Prosecutors to report to their new stations. Lack of sufficient numbers of state attorneys may hamper timely accessibility to justice by the citizens. In response management explained that the matter of recruitment of staff was handed over to the Public Service Commission. I await necessary action.
b) Installation of solar panels Purchase and installation of solar panels budgeted at Shs.12,000,000 was not carried out. Management stated that the delay was caused by unwillingness of bidders to quote before visiting sites. It is not clear why site visits were not included in the work plan earlier. Lack of solar panels may adversely affect operation of electrical equipment in the offices. I await necessary action.
29.3 Overdrawn Bank Account The certificate of bank balances as at 30th June 2007, indicates that the Directorate had a bank account No.245.20302.7.1 with a debit balance of
252 Shs.190,696,272. The account is not known to the Accounting Officer and therefore was not captured in the financial statements.
The Accounting Officer was advised to liaise with Bank of Uganda and the Accountant General for information relating to the account.
The Accounting Officer explained that he had written to Bank of Uganda for clarification on the account.
29.4 Funds Wrongly Credited to Another Account A supplementary funding of Shs.960,828,000 earmarked for the Directorate of Public Prosecutions (DPP) to cater for the investigation on the report on the Judicial Commission of inquiry into the alleged mismanagement of Global Funds was wrongly credited to the Ministry of Internal Affairs and was therefore not accessed by the Directorate. The activity was thus not carried out by the Directorate despite its critical importance.
The Accounting Officer should seek for the necessary funding from Ministry of Finance to have this activity carried out.
30.0 PARLIAMENTARY COMMISSION
30.1 Outstanding Advances to the Members of Parliament During June 2007, Members of the Eighth Parliament were advanced a total of Shs.3,190,000,000 for Constituency development. This advance was not retired by year end. I was therefore not able to establish whether the funds were utilized in accordance with the guidelines issued by the Parliamentary Commission. In his response, the Accounting officer explained that only 69 members submitted accountability leaving 250 members still outstanding. He further explained that an initiative was made to introduce a law to govern the scheme but not much progress was made. Meanwhile he has taken
253 administrative measures not to release more funds to those who have not accounted for the previous advances. I have urged him to ensure full accountability of the advances
30.2 Fixed Assets Register The Commission is in the process of establishing a Fixed Assets Register in which all fixed assets – furniture, computers and other equipment are recorded. However the Register being introduced has not been approved by the Accountant General as required by regulations.
For standardization I have advised the Accounting Officer to consider adopting the Fixed Asset Register solution that is being deployed in all Government Ministries by the Accountant General. This will necessitate liaison with the Accountant General.
31.0 HEALTH SERVICE COMMISSION 31.1 Unauthorized expenditure
The commission incurred unauthorised expenditure of Shs.22,027,057 on treatment of a former commissioner. This was in addition to a sum of K.shs.600, 000 that was earlier approved by the medical board.
Though the commission sought retrospective authority to incur the expenditure, it was not provided.
The Commission is advised to regularise the expenditure.
32.0 JUDICIAL SERVICE COMMISSION
32.1 Payment of Salary against expired contract.
254 The four year contract for one member of the Judicial Service Commission commenced on 3rd Feb, 2003 and expired on 2nd Feb 2007. The contract was renewed on 4th May 2007 for another term of four years.
However, it was noted that during the months of February, March and April 2007, salaries totalling Shs.8,700,000 computed at Shs.2,900,000 per month were paid to the officer. I did not obtain evidence that his employment with the Commission during this period was regularized. In the absence of authority, the expenditure remains irregular. In response management stated that only shs.5,800,000 was recoverable in respect of February and April. I await necessary evidence of recovery and explanation.
32.2 Utility Bills During the year, the commission made deposits totalling Shs.15,285,779 to National Water and Sewerage Corporation (Shs.4,950,227) and Umeme Ltd (Shs.10,335,552) in settlement of water and electricity bills respectively. The following anomalies were noted;
32.3 Water Bill overpayment Shs.2,386,762 According to records, farmers House Ltd charges its tenants including the Commission a monthly flat rate for water of Shs.213,622 monthly, that is Shs.2,563,464 annually. It was not clear how the charge of Shs.213,622 was arrived at.
During the year, the Commission made a total deposit of Shs.4,950,227 to National Water and Sewerage Corporation. This appeared to have resulted into overpayment of Shs.2,386,763 (4,950,227 – 2,563,464) which should be recovered from M/s Farmers House Ltd.
b) Electricity Bills There are three electricity meters which the Commission pays for, but one of them is shared with Uganda Property Holding Ltd and 255 other tenants. There is no evidence that these other tenants contribute to the bills.
In response management stated that negotiations between all the tenants had been done with regard to water bills and that a request to UMEME for a separate electricity meter had been forwarded. I advised the accounting officer that a written memorandum of understanding between the tenants should be drawn up to address the issues.
32.4 Civic Education on Public Awareness of Judicial Systems: Since 2003 about Shs.1,692,435,000 has been received for sensitization of the public about Judicial systems in thirty districts through workshops /seminars. However according to invitation lists, only district LCV executive and their councillors, district heads of departments, LCIII chairpersons, sub-county chiefs and some of the local NGOs were requested to attend. The rural people who are the vast majority and vulnerable to the injustices in the judicial system due to inadequate knowledge of the roles and responsibilities of institutions are not targeted by the programme. Besides the evaluation reports and the yardsticks that would measure the success and impacts of this sensitisation were not availed for audit.
It is recommended that a credible assessment system of the success and impacts of the campaigns be put in place and availed for verification.
33.0 ELECTORAL COMMISSION
33.1 Transfer of Un-utilised Bank Balances
256 The Treasury General bank account balance of Shs.1,177,457,155 relating to the financial year 2005/06 was not transferred back to the Consolidated fund at year end contrary to regulations.
I did not also obtain explanation for having such huge balances remaining un-utilised at year end. For the financial year under review this amount stood at Shs.992,138,070. I have advised the Accounting Officer to liaise with the Accountant General for necessary action.
33.2 Unaccounted for Funds
A total of Shs.329,815,000 advanced to various Returning Officers upcountry remained unaccounted at year end contrary to financial regulations. Unaccounted for advances reflect an apparent breakdown in controls over advances which may lead to financial loss.
The Accounting Officer is advised to follow up the accountability.
33.3 Litigation Costs
During the year under review, the Commission paid out a sum of Shs.715,280,825 to various law firms in election petitions arising from the 2006 general elections. The amount was paid to firms that represented plaintiffs and also to firms that were defending the Commission in various suits brought against it. The following matters were noted; • The amount paid of Shs.715,280,825 to various law firms and bailiffs lacked supporting documents such as court judgments.
• The financial statements for the year under review do not disclose any quantified contingent liabilities relating to legal suits. This does not compare well with the earlier outstanding figure of Shs.1,341,947,058 disclosed in the previous year.
257 • The statement of non-quantifiable contingent liabilities as at 30th June 2006 indicates a number of court cases that were either dismissed or withdrawn with costs to the Electoral Commission. It is not known whether the costs have now been made good.
The Accounting Officer is advised to trace the necessary documentation and also render accountability for the recoverable amounts from suits won by the Commission.
33.4 Unaccounted for general receipt books
Two (2) receipt books issued to returning officers for collection of nomination fees remained unaccounted for at the end of the year under review.
33.5 Excess Expenditure The Statement of Appropriation reflects excess expenditure on domestic arrears totalling Shs.713,109,939 for which no budgetary provision was made. There is no evidence that the excess expenditure was regularised by way of reallocation or virement.
33.6 Rent Expenditure
During the year under review, Shs.402,987,840 was paid to various property owners as rent in order to accommodate Electoral Commission officials who operate across the country. However, Shs.164,575,200 of this expenditure was not supported by valuation reports from the government valuer.
Furthermore the Commission paid Shs.22,680,000 as VAT charge by a local firm, without a tax invoice contrary to the tax law. In the absence of evidence of VAT registration, the amount is recoverable from the payee/landlord.
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34.0 UGANDA HUMAN RIGHTS COMMISSION
34.1 Un-appropriated Projects The Commission has a number of projects with budgets worth Shs.1,395,618,271 which were not appropriated by Parliament under the vote. The Commission received grants from international organisations outside its budget, totalling Shs.83,374,533. Use of funds which have not been appropriated by Parliament creates unauthorised extra budgetary expenditure.
Government may not be able to monitor the utilisation of such funds. All projects funds should be appropriated by Parliament as required by the law. Meanwhile efforts should be made to regularise the related expenditure in accordance with the law.
Management should always seek for supplementary budget approval to regularise the related expenditure.
34.2 Unauthorised Excess Expenditure The financial statements show that the Commission registered excess expenditure of Shs.553,178,855 on employee costs without authority.
I have advised the Accounting Officer to have the expenditure regularised in accordance with the regulations.
34.3 Illegal Operation of Bank Accounts in Commercial Banks
The Uganda Human Rights Commission (UHRC) operates bank accounts in various commercial banks in Kampala and upcountry branches for its financial operations. However, scrutiny of documents revealed that these accounts are being operated or were operated without authority of the Accountant General contrary to the existing regulations. Although
259 management had sought retrospective authority, the response from the Accountant General was not seen at the time of this report.
Management should endeavour to follow up the matter with the Accountant General.
34.4 Hansard Pension Contribution Scheme
During the period of audit, it was noted that the Commission remitted contributions to the Hansard Pensions Scheme, a private scheme amounting to Shs.9,900,000 for two Commissioners. Although the Accounting Officer explained that the scheme had been closed, I could not establish the total contributions made to the scheme and the surrender value paid to the Ugandan members who could have relied on the advice of their employer to make additional savings outside the statutory NSSF scheme. Besides, the bank account for the scheme was not authorised by the Accountant General as required.
34.5 Incorrect Registration of Commission Vehicles
The Commission procured five vehicles, three of which were acquired using the Government of Uganda counter part funds. However, two of the vehicles were registered under the Ministry of Justice for reasons which were not explained.
In addition, Shs.139,576,000 that had been allocated to cater for the taxes for the vehicles was paid to the Treasury as required by the new system of tax payments. I could not independently verify whether funds eventually reached the Tax Authority.
Management should ensure that all assets acquired using the Commission funds are accordingly registered as Commission assets.
34.6 Funds for fuel Unaccounted for
260 Out of Shs.112million deposited to Shell Petrol Station during the period July 2006 to June 2007, Shs.8,000,000 remained unaccounted for contrary to regulations which require all advances to be retired by the year end.
35.0 PUBLIC SERVICE COMMISSION
35.1 Board of survey
The recommendation by the board of survey to dispose of various obsolete items was not effected. Among the items were motor vehicle, photocopy machine, fans, computer, telephone receivers and chairs. Though management explained that a process of boarding off vehicles has begun, no values were attached to the items. I await the transparent completion of the process.
36.0 LAW REFORM COMMISSION
36.1 Staff Establishment The commission is currently understaffed as a number of posts for technical staff as well as support staff have remained vacant for a long time. This was made worse when some technical staff left the commission during the year.
The Commission faces a risk of poor service delivery which may result into failure to achieve the intended objectives.
The Accounting Officer explained that recruitment is ongoing but conducted in phases as advised by the Ministry of Finance. The final recruitment to fill all the vacant posts will be done in the financial year 2008/09. 36.2 Staff Gratuity The Commission had outstanding gratuity for staff on contract in arrears of over 3 years amounting to Shs.11,888,186. This balance was not disclosed
261 in the financial statements and the statement of outstanding commitments. This understates the payables position by the same amount.
The Accounting Officer explained that the Commission has been constrained to pay technical staff statutory allowances due to inadequate funding.
37.0 EDUCATION SERVICE COMMISSION
37.1 Un authorized reallocation of funds In the absence of a Reallocation warrant the diversion of Shs.360,000,000 from recurrent to capital expenditure is considered un authorized. This practice defeats the original intentions of parliamentary appropriation.
Though management stated during discussions that necessary reallocation documents were available, they were not provided for verification. Management should seek necessary approvals for reallocation to comply with regulations.
37.2 Utilities
Shs.1,880,978 was reallocated from the item; committee, council and board expenses to settlement of a water bill without necessary authority. This practice may imply inadequate budgeting process. Management should seek necessary approvals for reallocation.
38.0 LOCAL GOVERNMENT FINANCE COMMISSION
38.1 P.A.Y.E
262 Statutory deductions relating to P.A.Y.E totalling to Shs.16,500,000 were not made from allowances paid to Commissioners during the year under review, contrary to the Income Tax Act.
The Accounting Officer is advised to have the deductions made and remitted to Uganda Revenue Authority.
38.2 Irregular Payment of Allowances: A total of Shs.60,000,000 was incurred when five part time Commissioners continued to be paid a monthly consolidated allowance of Shs.1,000,000 each during the financial year 2006/2007, irrespective of whether they sit or not. This contravenes 58 (1) and (2) of Local Government Finance Act 2003. The same Commissioners were also paid sitting allowances whenever they attended the Commission meetings.
In his response, the Accounting Officer explained that there was a need to retain and motivate the Commissioners who undertake serious tasks on behalf of the Commission. He also stated that these allowances were approved in the Commission meetings. However, documents in support of this explanation were not availed for audit.
I advised the Accounting Officer to follow up the matter with the appropriate Authority in order to regularise these consolidated allowances.
39.0 UGANDA BLOOD TRANSFUSION SERVICES
39.1 Grounded Vehicles
Treasury Accounting Instructions, Part II appendix E, require that where it is deemed that inventories, vehicles e.t.c. are beyond their useful lives and uneconomical to repair, lists of these items should be prepared giving details of age and approximate value. The Accounting Officer should submit
263 to the Accountant General these lists requesting that a board be appointed to inspect these items with a view to their disposal or condemnation.
However, the organisation has a total of 14 motor vehicles and three motor cycles that have been grounded at its premises for over ten years leading to deterioration in residual value and loss of revenue to Government. About six of the vehicles have now become scrap and several of these vehicles are covered by overgrown bushes causing an environmental risk to the employees. What could have served as a parking space is now occupied by grounded vehicles.
The Accounting Officer explained that the disposal process was initiated but could not be completed because he had to seek clearance from Ministry of Health and other Development Partners who financed the procurement of these vehicles. He indicated that the process would be completed in the financial year 2007/2008.
I await the outcome of this disposal process.
40.0 UGANDA LAND COMMISSION 40.1 Lack of a Statutory Budget: Under article 155 of the Constitution and sec 54(1) of the land Act, 2000, the salaries and allowances of the members of the Commission should be a charge on the consolidated fund. However, contrary to the above, a total of Shs.34,800,000 and Shs.19,464,800 was paid out as salaries to the chairman and allowances to the commission members respectively out of the development and recurrent budgets without proper authority.
The Accounting officer explained that the budgeting process had already been completed before the Commission became a vote and that this was to be streamlined in the subsequent year.
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The commission should properly budget for its statutory expenditure in accordance with the Act.
40.2 Over Expenditure
The Commission incurred a total of Shs.588,838,050 in excess of the approved budget appropriation without relevant authority. The Accounting Officer explained that this was caused by property rates paid which had not been budgeted for by the Commission.
I advised the Accounting Officer to make adequate provision for rates in his annual budgets.
It was also noted that although the Commission is responsible for settlement of property rates for all government buildings in all towns and municipal councils in all districts of Uganda, there is no register being maintained for all government buildings for which rates are payable. As a result it is not possible to ascertain the arrears position for property rates. There is also lack of clarity on who is actually responsible for property rates management as Ministry of Lands is also carrying out the same function. The Commission should put in place a complete Register for all government buildings for which it pays property rates. There is also need for streamlining the procedures for management of property rates.
40.3 Acquisition and Disposal of Government Land Article 239 of the constitution gives the Uganda Land Commission the mandate to hold and manage land in Uganda vested in or acquired by the government of Uganda in accordance with the provisions of the constitution. Sections 49 and 53 of the Land Act further gives the Commission powers to handle all land related matters. However these provisions appear to be inconsistent with the PPDA Act on matters relating to acquisition and disposal of government land. Under the PPDA Act, land 265 is taken as a Public Asset and hence its acquisition and disposal should follow the PPDA Act and Regulations. This position has been challenged by the Commission and there is therefore need to harmonize the two laws so as not to conflict with the constitution.
The Accounting Officer explained that the issue is to be addressed under the private sector competitive project II which is funding law reform.
40.4 The Land Fund According to sec 41(10) of the land Act cap 227 revised edition 2000,the land fund should have been set up within one year after coming into force of the (1998) land Act. However this fund has never been operationalised as required by the law. It was also noted that there is another fund being proposed under the Ministry of Finance to serve more or less the same purpose.
There is need to operationalise the land fund envisaged in the Land Act which should also be harmonised with the proposed Land investment fund.
The Accounting Officer explained that the Draft Regulations for the Land fund have been made and were about to be submitted to Cabinet for consideration.
40.5 Non Transfer of Land Ownership During the year under review, a total of Shs.379,544,000 was spent by the Commission on acquisition of land from absent land lords in the districts of Kibaale and Hoima. Over thirty five (35) titles were surrendered to the Commission together with signed transfer forms by the previous owners. By the time of writing this report, the titles had not been transferred into the commission names.
266 Failure to transfer the land titles into Uganda Land Commission exposes the government land to encroachment and fraud.
It was also noted that the Commission has not come up with the guidelines, for use and distribution of the acquired land.
The commission should expedite the process of securing titles for all the land purchased by them and also come up with the necessary guidelines (Regulations) for distribution of the acquired land as required by the law.
40.6 Land Inventory • The Commission which is legally entrusted with all central government land does not have a complete inventory of all the land under its custody. What is in place is an incomplete list/schedule which lacks major details such as plot numbers, acreage of land etc. A test check on a sample of Kampala District land transactions revealed that Plots leased to developers are not captured in the land registry of Uganda Land Commission to form part of land inventory.
• Government plots of land under the custodianship of the Uganda Land Commission do not bear the acreage of land that can allow institutions ascertain and monitor encroachment on the land.
There is need for a country wide data collection exercise in order to have the inventory updated with the necessary details. In his response the Accounting officer explained that this activity will be handled under the private sector competitive project.
40.7 Non Tax Revenue a) Lack of General receipts
267 It was noted that for all the Non Tax Revenue collected by URA on behalf of the secretary to the ULC, no general receipts were issued by the commission for the amounts collected contrary to sec 13(c) of the Treasury Accounting Instructions 2003 part 1. This means that the commission has no basis for entries to be made in the commission books for Non Tax Revenue collected and as a result no cash book was prepared for the collections during the year. In the absence of this I could not confirm the balances disclosed in the financial statements as having been collected.
The Accounting Officer should obtain general receipt books from treasury to receipt all NTR collected in accordance with the Treasury Accounting Instructions.
b) Lack of controls in monitoring of debtors: The Commission receives annual lease rentals from those lessees to whom government land is leased out. However there is no system in place to monitor lease payments and outstanding rentals. Therefore, I could not ascertain how much should have been collected from such a source during the year under review.
The accounting officer attributed this to non operational postal addresses and non functional telephone numbers provided by the lessees.
There is need to open up a ledger into which all the above lessees should be recorded and up dated as and when payments are received and to put in place mechanisms for reminders whenever rent is due.
40.8 Guidelines for Valuation of Land
268 The Commission raises offers for all lease applications which are successful showing the total premium and annual lease payments payable. It was noted that in some instances initial premiums offered are sometimes later revised downwards. However, there are no proper guidelines valuation and variation of offers. The final premium paid appears to depend on negotiations between the Government Valuer and the applicants. There were also no standard rates for plots of land in a particular area.
The following offers were revised after acceptance but I did not ascertain the criteria used to reduce the premiums and rentals.
Plot No. acreage Initial Revised Initial Revised rental premium premiums premiums 41 Kaggo 0.333ha 2,000,000 1,000,000 40,000,000 20,000,000 Rd Mbuya 37 Kaggo 0.248ha 1,500,000 750,000 30,000,000 15,000,000 Rd Mbuya 33 Kaggo 0.272ha 1,650,000 800,000 33,000,000 16,000,000 Rd Mbuya 35 Kaggo 0.233ha 1,400,000 700,000 28,000,000 14,000,000 Rd Mbuya 39 Kaggo 0.223ha 1,350,000 650,000 27,000,000 13,000,000 Rd Mbuya
In the table above the plot 41 Kaggo Roads Mbuya was offered to an applicant at a premium of Shs.40,000,000 and annual rental of Shs.2,000,000. The applicant requested for a reduction because he could not afford the applicable terms. A reduction was subsequently made to Shs.20,000,000 as premium and Shs.1,000,000 annual rental. Immediately after, he requested the Commission to transfer the offer to another
269 applicant at the new terms since he could still not pay up. I found this strange.
The Commission should streamline the procedures for allocation and disposal of government land to ensure transparency and maximize value.
40.9 Lack of Approved Staff Structure The Uganda Land Commission was granted self accounting status in July 2006 by parliament specifically to provide for tenure, ownership and management of land to ensure rational and sustainable utilization of land for economic development. It was however noted that the Commission still operates on the same structure which was approved by Ministry of Public Service when it was still a department under the Ministry of Lands. It has currently 24 established and 7 contract employees who according to the Accounting Officer are not adequate for the proper functioning of the organization.
The Accounting Officer explained that the process of rationalizing of the work activities and review of the structure was underway.
41.0 UGANDA INDUSTRIAL RESEARCH INSTITUTE
41.1 Governing Board The Uganda Industrial Research Institute Act, 2002 provides for establishment of a governing board consisting of a Chairperson and eleven (11) other members selected from various organisations as specified in the first schedule to the Act. It was however noted that at the moment the Institute does not have a fully constituted functioning board. Although appointments were proposed by Cabinet, the process was not progressed because of the need to have the Uganda Research Institute Act 2002 amended.
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It was also noted that process of restructuring the Institute has not been completed as directed by the Cabinet.
The absence of a functioning board and an appropriate organisation structure for the Institute implies that there is lack of an appropriate governance framework to give the Institute strategic direction.
41.2 Current Status of Uganda Industrial Research Institute Uganda Industrial Research Institute (UIRI) is currently a parastatal organisation established by an Act of Parliament of Uganda under the auspices of the Ministry of Tourism, Trade and Industry (MTTI).
The Mission of the Institute is “To improve capacity and competence of the private sector in undertaking viable industrial production processes, and increase the sector’s ability to produce high quality marketable products through enhanced research, training and technical know how”. The other part of the dual mission is to provide demand driven scientific industrial research and development (R&D) as well as internationally competitive technical services that will lead to rapid industrialisation for the benefit of the people of Uganda.
Uganda Industrial Research Institute has traditionally been involved in food processing, ceramics and analytical laboratory practice.
It is not yet clear whether Uganda Industrial Research Institute is on the right track as far as its mission attainment is concerned. The National Planning Authority (NPA) in its June 2005 publication paints a gloomy picture of the state of industrialisation in Uganda as highlighted by the Executive Director, UIRI in his paper – the role of Uganda Industrial Research Institute in industrialisation of Uganda.
271 The National Planning Authority Vision 2035 document stated among others that:- • Uganda is grossly deficient in technology and lacks adequate indigenous capability of technological masterly.
• It is estimated that only 12% of Uganda’s exports are high technology exports compared for example to Malaysia with 58%.
• Uganda currently lacks the necessary technological man-power which can absorb technology through the process of technology transfer.
• The problem of weak indigenous technological capacity is compounded by the shortage of scientists, engineers and technicians, who are specially trained for the purpose of technology adoption and diffusion in the country.
The Executive Director in his paper also quoted the economic commission for Africa (E.A) which reported Uganda’s manufacturing sector to have contributed up to 12% of GDP in the 1960s, 15% by 1974 and only 12% currently. These findings indicate the future challenges that UIRI has to address and its role in economic development of the country.
Government through the relevant Ministries should intervene to ensure that the Mission and Mandate of UIRI are realised and enhanced.
41.3 The Industrialisation and Innovation fund The industrialisation fund was formally launched in financial year 2005/06 with a budgetary support of UShs.7.25 billion to support commercialisation of value addition for coffee, banana and cotton. Shs.2.75 billion was also reportedly provided for the support of development and commercialisation of suitable technology proto-types and to be co-ordinated by UIRI. The
272 Permanent Secretary/Secretary to the Treasury letter ref: ISS/57/255/015 of 13.04.2005 seems to confirm this position.
However, I am not in a position to confirm whether the said fund was established and how it has been operated.
41.4 Unaccounted for Advances Contrary to the Public Finance and Accountability Regulations Section 65 that requires retirement of imprest by the end of the financial year, Shs.2,720,000 advanced to an official for fuel and allowances for carrying out training remained unaccounted for.
41.5 Renovation of the PCB Laboratory During the period the Institute carried out renovations on the PCB laboratory. It was noted that the renovations were carried out by the staff of the Institute instead of contracting it out to private firms. There was no evidence that the work was being properly supervised by a competent authority.
Furthermore materials for the work were bought in many instalments and most of them lacked proper supporting documents. I could not establish the total cost of the work because I was not availed with any initial budget or the completion report on the renovation.
I have advised the Accounting Officer that certificates of work done and progress reports be availed for review.
273 42.0 UGANDA AIDS COMMISSION
42.1 Excess Expenditure
The Statement of Appropriation Account reflects excess expenditure of Shs.623,803,865 for which management did not obtain Parliament approval. During discussions, the Accounting Officer explained that the amount was mainly a result of direct donor funding through projects. I advised him that the law requires all expenditure including project expenditure have the approval of Parliament.
42.2 Uganda Aids Commission Building Since the time the new building was commissioned on the 8th October 2005 the following has been noted.
• The floor tiles are peeling off. • The climbing stairs have developed loose ends. • Toilets have been restricted in use because they are broken.
In view of the above the quality of workmanship becomes questionable and this may lead to higher future maintenance costs.
In his response the Accounting Officer explained that all defects were corrected during the defect liability period and all subsequent defects are now being treated as routine maintenance.
I have advised him to provide for an adequate maintenance for the purpose.
42.3 Uganda HIV/AIDS Control Project; IDA Credit NO.3459 (a) Counterpart Funding It has been noted that the Government of Uganda budgeted for shs.625,000,000 to finance project activities. However, only 274 Shs.200,000,000 was released leading to a shortfall of Shs.425,000,000. This affected timely completion of project activities.
As at 30th June 2007, the project management forwarded unsettled payments amounting to Shs.201,780,315 to the Uganda Aids Commission
(b) General Standards of Accounting and Internal Control (i) Vehicle costs It was noted that several district vehicles were repaired by the project management and yet the vehicle repairs and maintenance was the responsibility of the districts.
In addition, certain vehicles allocated to the districts were brought to the project to repair them. However, it was observed that some vehicles were repaired twice for instance Vehicles Number UAA 577E for Mayuge district was repaired on 23/2/7 at a cost of 12,768,190 and on 15/3/2007, additional repairs were carried out amounting to Shs.5,458,680.
Below are vehicle repair costs incurred by the project:- Sironko 13,522,660 Prisons 12,909,120 Mbarara 16,314,559 Bushenyi 5,453,665 Hoima 9,842,000 Kabale 9,688,803 Masindi 12,876,650 Total 79,454,260 Management explained that owing to continued resource constraints it became increasingly difficult for some districts to meet the vehicle operational costs. In such exceptional cases the project office paid on behalf of districts repair and parts replacement costs. 275
He further explained that the intervention was necessary for the vehicles to remain on road and sustain the district level multi- sectoral activities as the project support came to an end.
(ii) Fixed Assets Management The project maintains a fixed assets register. However, additional project assets procured during the year were not included in the register. For instance, the following assets were not included in the fixed assets register.
• 1 desktop dell GX 620 • 2 desktop dell 210 • 2 laptops • 4 LaserJet printers • 3 APC 100VA UPS • 60 conference chairs • 10 conference tables(6 seater) • 10 bookshelves with glasses • 17 open book shelves • 1 board room table 30 boardroom chairs • 6 library tables • 30 library/shelves • 1 sofa set Lack of update register may weaken monitoring of fixed assets which can lead to unwarranted purchases of assets.
Management explained that the assets were subsequently recorded in the assets register.
Management has been advised to ensure that the fixed assets register is regularly up-dated. 276 (iii) Sustainability According to the Project Completion Report (PCR) the project contributed in the multi-sectoral approach to respond to the HIV/AIDS scourge through a number of Interventions like CHAI, LQAS and District HIV/AIDS strategic planning which will provide for subsequent HIV/AIDS programmes. However, it was noted that the long term sustainability will not be realized unless activities of the project get mainstreamed in the government budgets. In addition, the situation of maintaining the HIV/AIDS community support programme started by the project is not clear.
Management explained that the sustainability has been given due consideration by:-
• Mainstreaming HIV/AIDS in the Poverty Eradication Action Plan (PEAP). • Mainstreaming HIV/AIDS in Local Governments. • Institutionalization of Community Driven Development (CDD) • Increased Funding from Development Partners
43.0 MAKERERE UNIVERSITY 43.1 Unauthorised Expenditure During the year, the University’s actual expenditure on employee costs was Shs.71,273,850,590 against the approved budget of Shs.60,158,954,140 leading to excess expenditure of Shs.11,114,896,450. No evidence of reallocation or virement was availed for audit. The practice of spending beyond the approved limits is an indication of weaknesses in controls over budgetary expenditure.
I advised the Accounting Officer to always endeavour to spend within the approved budget and where there is need to re-allocate funds, the right procedures should be followed as provided by regulations. 277 43.2 Un-audited Account Balances Examination of accounts revealed that various balances like the sundry debtors balance (Shs.72,345,200), sundry creditors balance (Shs.4,534,845,982), deposits received (Shs.3,393,570,470), cash and cash equivalents (Shs.15,088,521,999) and withholding tax payable (Shs.20,212,196), could not be verified due to absence of supporting schedules, hence limiting the scope of my audit.
I advised management to update the respective individual account ledgers and prepare schedules to support those balances appearing in the final accounts. I recommend further that management should justify holding over shs.3 billions on its below–the-line account (deposits) without paying over the funds to its rightful recipients.
43.3 Authority for operating University Bank Accounts
It was further noted that the University operates 132 (one hundred thirty two) bank accounts. However, although the Universities and Other Tertiary Institutions Act, 2001 requires the University to seek authority from its council to operate bank accounts, evidence for the Council’s authority was not made available for audit. In the absence of such authority the opening and operations of the accounts is rendered irregular.
In a related development it was noted that various University clients can transact business with at most four bank accounts of the University. I did not obtain justification for the operation of so many bank accounts by the University.
I urged the University management to always seek authority from the University Council to open and operate any bank account as required by the law. I recommend further that management should also consider minimising the number of operational bank accounts to ease supervision and strengthen financial management controls.
278 43.4 Un-authorized Allowances
A total of Shs.4,520,666,098 was paid to academic and non academic staffs in form of allowances during the year under review. Scrutiny of supporting documents however revealed that whereas a category of allowances totalling Shs.2,237,145,861 were approved by the University Council, the balance of Shs.2,283,520,237 were unlawfully paid. Among the irregular allowances paid were: examination setting allowance, data entry allowance, responsibility allowance, Administrative staff examination allowance, Registration allowance, teaching allowance and department retention allowance.
Payment of un-approved allowances violates the authority of the University Council.
In their written response management stated that the allowances were budgeted for by the faculties and the budgets were approved by the Council. I advised the accounting officer to further streamline the allowances payable to staff to ensure that only allowances approved by University Council are paid and to have the irregular allowances regularised by the Council.
43.5 Procurement (i) Procurement Plans
The University does not have a Master Procurement Plan as required by the PPDA Act. This is partly due to the fact that the individual departments prepare their plans but these are not consolidated together. Some departments do not submit procurement plans in spite of reminders. Management explained that departments have requested for a procurement staff to be attached to each Faculty so that he/she can give guidance and advice on procurement matters.
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I advised management to always comply with the PPDA Act and regulations as far as procurement planning is concerned.
(ii) Assorted Procurements at faculty of Social sciences
The faculty of Social sciences incurred shs.75,641,766 on assorted goods and services during the period under review. However, contrary to the Public Procurement and Disposal of Public Assets Regulations Sec. 84, Sec. 117 and Sec. 118, the payments were not supported by Local Purchase Orders, Delivery Notes and Goods Received Notes. It was noted that individuals were routinely advanced funds to purchase office items instead of using the pre-qualified firms through the procurement unit. I was therefore unable to ascertain whether value for money was derived from these procurements. The table below gives the breakdown.
S.no Nature of procurement Amount 1. Advances to individuals 19,831,000 2. Single sourcing 55,810,766 TOTAL 75,641,766
I advised management to carry out an investigation to ascertain the probity of these procurements.
(iii) Painting Faculty Buildings
The Faculty of Law spent a total of Shs.5,294,210 to purchase paints and materials for painting its buildings. Another sum of Shs.3,185,000 was incurred on labour charges. However, there was no evidence that technical advice was sought from the estates department in terms of requirements and fees chargeable. Besides, the painter was single sourced contrary to PPDPA regulations which provide for competitive procurement for purchases above Shs.2 million.
280 In response management stated that in future, procurement regulations shall be followed strictly.
(iv) Stationery
An amount of Shs.19,219,000 was paid to a stationery supplier for having supplied assorted stationery for the Academic Year 2006/2007 semester 1 for the faculty of Law. Scrutiny of supporting documents revealed that the procurement was not made by use of a Local Purchase Order as required by regulations.
The stationery received was recorded in a counter book instead of a stores ledger. However, usage could not be verified due to the absence of necessary supporting documentation.
During discussion the Accounting Officer explained that necessary records would be traced and produced for audit.
I advised the Accounting Officer to investigate the purported supply with a view to ascertaining value for money and taking corrective action. I recommend further that all procurements should be handled in accordance with the PPDA Act and Regulations.
(v) Teaching materials
Various staff of the Faculty of Veterinary were advanced a total of Shs.111,244,472 for procurement of assorted teaching materials. It was however noted that the single sourcing method of procurement was used predominantly, instead of competitive bidding as required by the PPDA regulations.
I advised the Accounting Officer to investigate the transactions. I recommend further that all procurements should follow the guidelines outlined in the PPDA Act and regulations.
281 (vi) Micro Procurements of Goods and Services
A sum of Shs.136,866,760 was incurred on Micro Procurement by the Academic Registrar’s Department. However:-
• Contrary to section 118, 142, 117 of the Act, Shs.78,785,331 worth of goods were purchased from firms which were not pre-qualified. Single sourcing was applied to select the suppliers.
• Similarly, single sourcing was applied to purchase goods amounting to Shs.34,710,150. The Procurement falls under restricted bidding according to section 115 and 142 of the Act.
• Contrary to regulations a total of Shs.12,265,340 was paid to the supervisor of works in the University’s Estates Department for direct labour and supplies.
• Contract Committee authority was not sought for printing services paid at Shs.11,105,030.
• The number of micro procurements were many and not supported by user requisitions as required by PPDA Act section 34 (1) (b).
• Repetitive orders were given to some suppliers without rotating them as required by regulations 143 (4) (a).
Repetitive orders on micro procurement to certain firms and individuals are not permitted under the PPDA Regulations. The PPDA Act and Regulations 2003 should be adhered to.
I advised the Accounting Officer to ensure that the PPDA Act and Regulations, 2003 are adhered to.
282 (vii) Procurement of Text Books
A local firm was paid Shs.292,216,001 through Bank of Uganda in respect of supply of text books for the University Library. However in the absence of bidding documents, evaluation minutes and contracts committee approval I could not vouch for the regularity of the procurement process.
It was further noted that the delivery notes attached were neither certified by Internal Audit nor stamped by the Librarian as received and taken on charge. There is a risk of under delivery of books which would lead to financial loss.
(viii) Printing Services
A sum of Shs.16,470,000 was paid to a firm for printing the African Crop Science Journal without subjecting the procurement to competitive bidding. In addition the firm was not a pre-qualified service provider contrary to regulation 84, 117 (2) and 142 of the Public Procurement and Disposal of Assets Act 2003. Improper procurements subject government to the risk of loss of funds.
I advised the Accounting Officer to ensure that the PPDA Act and Regulations are adhered to.
(ix) Purchase of binding materials and related stationery
Binding materials and associated stationery worth shs.74,205,452 were purportedly procured for the university library during the year. However in the absence of requisition notes, contracts committee approval and local purchase orders I was not able to satisfy myself that the procurement complied with the Public Procurement and Disposal of Public Assets Act, 2003. In reply management stated that supporting documents are available. I await delivery of these documents for verification.
283 (x) Irregular Micro Procurement at Faculty of Human medicine
The Faculty of Human medicine incurred a sum of Shs.53,403,991 on goods and services during the year under review. Scrutiny of supporting documents revealed that the Faculty did not adhere to the various sections of the Public Procurement and Disposal of Assets Act/Regulations 2003 as indicated below:-
• Most payments were not supported by Local Purchase Orders.
• Orders were given to pre-qualified service without competition.
• Firms and individual suppliers who were not pre-qualified were issued with orders to supply goods and services.
• There is no evidence that quotations and proposals for micro procurement were submitted to the contracts committee for evaluation and approval.
• There were no delivery notes attached to some payments to confirm deliveries and to facilitate stores verification.
It would also appear that payments were split to avoid use of recommended procurement regulations.
I advised the Accounting Officer to investigate the individual procurements to ascertain whether value for money was derived from the funds spent and take corrective action where necessary. I recommend further that the Accounting Officer ensures that the PPDA Act is adhered to in all procurements made.
43.6 Hire of Lecture rooms
Four faculties incurred Shs.105,735,000 on hire of lecture rooms from other faculties/departments during the year under review as follows;
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Hiring Amount Fees Receiving department department/faculty Computing and information 55,800,000 Food science, physics and St. technology Francis Chapel. Law 21,735,000 Food science and Senate building Social sciences 13,800,000 Various Institute of Statistics and 14,400,000 Technology applied Economics Total 105,735,000
However, there is no policy to guide management on the hiring rates, duration, space size, accessibility to facilities and terms of payment. Lack of clear policy may lead to some faculties overcharging others.
Management explained that the University Council would review the matter. I await the outcome of the University Council’s review.
43.7 Irregular remuneration
(i) Payments of Salary in Lieu of Leave
A sum of Shs.6,881,170 was paid to sixteen members of support and administrative staff in the faculty of law in lieu of annual leave. This practice is irregular because the government abolished the policy of payment in lieu of leave. Besides the University salary and wages department did not consent to the payments, nor was the University administration consulted.
During discussions, management promised to recover the funds. I await evidence of recovery.
(ii) Double Salary Payments
A member of staff at the faculty of law acting in a post was paid a full monthly salary attached to an expatriate of Shs.1,142,857 in addition to his routine salary. This is contrary to regulations which permit payment of acting allowance which is normally a percentage of gross salary or the
285 difference of the two officers’ salaries. Management pledged to recover the extra payment. I await necessary action.
(iii) Contract Staff Salaries at School of Education
Thirty (31) contract staff were recruited at the school of Education without following proper recruitment procedures. There was no evidence that the recruitment was approved by the Human Resource Department with regard to necessary competences. It would therefore appear that the attributable wages of Shs.60,084,203 were incurred improperly.
Management explained that in the decentralised system the faculty had been using an internal committee which would later seek central administration endorsement. Management was advised to have the recruitments regularised.
(iv) Payment of Part Time Salaries at the University Hospital
A sum of Shs.10,226,000 was paid out in form of salaries to part time staff employed by the Hospital. Scrutiny of supporting documents however revealed that:-
• There were no vacant posts in the establishment to warrant recruitment of part time staff.
• The Hospital authorities recruited these staff without approval of the Human Resources Department.
Management explained that the hospital structure is under review and that the part-time staff are to be regularised. I await evidence of action taken.
286 43.8 Advances Not Accounted for
(i) Subvention Account
A sum of Shs.71,924,910 was drawn from the subvention account and advanced to various faculties to enable students carry out industrial training, field visits and for purchase of surgical sundries. However in the absence of lists of recipients, dates of visits, receipts for purchases made and field reports, I was unable to confirm that the funds were used for the intended purpose.
Faculty Amount Purpose of advance Science 20,647,520 Industrial visits by Industrial Chemistry students Veterinary 5,316,000 Out of station allowance Medicine 18,055,800 Elective programme during recess term Forestry 9,514,000 Field trips Science 6,419,000 Purchase of teaching materials Science 3,584,000 Students clerkship in Butabika Veterinary 8,388,590 Purchase of surgical sundries Total 71,924,910
(ii) Funds Not accounted For at Various Faculties
A total of Shs.237,166,168 advanced to staff to carry out various activities at various faculties was not accounted for at the close of the financial year contrary to financial regulations. I could not ascertain whether the funds were applied to the rightful purpose. Faculty Amount (Shs) Purpose Social Sciences 54,570,000 Student Internship allowances Medicine 166,793,268 Research, workshops, travel, stationery, vehicle maintenance.
University Library 15,852,900 Workshops, maintenance, reading materials etc. Total 237,166,168
287 I advised the Accounting Officer to provide accountability of the funds.
43.9 Operation of Generators
Following recent power shortages experienced in the country, Several University departments acquired generators. Review of fuel usage at a sample of departments revealed various anomalies as outlined;
(i) Procurement of Generator
A generator worth Shs.120,761,200 was purchased from a company to serve the University Library. However scrutiny of procurement documents revealed that the procurement was not competitively bidded for as required by the PPDA Regulations. There was also lack of the inspection report on the quality of the generator by the estates department, neither did it have an operational manual.
(ii) Generator Fuel
A sum of Shs.54,986,656 was paid to various filling stations in respect of fuel for the generators under Academic Registrar’s office (Shs.7,232,076). University Library (Shs.29,349,700), Faculty of Computing (Shs.14,302,280), and Faculty of Economic Management (Shs.4,102,400). Fuel worth Shs.8302,000 was also purchased through direct cash payments by the Directorate of ICT. However, the utilisation and consumption could not be verified because:-
• There were no requisitions, order forms and goods received notes for the fuel. Fuel deliveries and issues were not recorded.
• The gauge for the generator for the Main Library was found faulty while that of the Faculty of ICT, readings were not being taken although the gauge was working.
288 • The estate department plays no role in the supervision and maintenance of the generators. In many of the departments and faculties this role has been left to the faculty accountants and the custodian.
I advised management on the need to streamline the procurement, supervision and maintenance of power back-up systems at the University. This may also necessitate exploring other alternative cheaper and more efficient sources.
43.10 Fuel Refund
Two senior officers of the Faculty of law were paid Shs.11,740,000 in cash to meet fuel requirements for official vehicles. This is contrary to government policy that stipulates use of Fuel cards to minimize handling of cash. Besides vehicle movement logbooks were not availed to determine authenticity of journeys made. I was therefore not able to ascertain the probity of the expenditure. Management explained that the fuel card system is to be adopted promptly and that accountability would be availed. I await necessary action.
43.11 Doubtful Expenditure
Expenditure totalling to Shs.47,811,719 incurred by the University Main library on various works appeared doubtful as explained below;
• One firm was paid a total of Shs.21,099,359 for various carpentry works and supplies. All the payments were not supported by user requisitions, LPOs, delivery notes and contract documents and invoices and the work was not verified by Estates Department.
• The Department of Mechanical Engineering did some roofing and fabrication works at a cost of Shs.2,601,000. The University Librarian in her comment dated 7th August, 2006 pointed out that the same work of roofing had been done by Estates Department. The additional works 289 done by the Mechanical Engineering Department was not verified by Estates Departments and is therefore considered doubtful. It appears controls regarding processing of payments are inadequate.
I advised management that there should be thorough scrutiny of repair claims to ensure that they are genuine and properly supported by requisitions, LPOs, delivery notes and invoices as required by accounting regulations.
43.12 Collapse of the Newly Constructed Perimeter Wall at Makerere University
A newly constructed perimeter wall around the University comprising of 133m along Makerere North Road collapsed on Saturday 8th September 2007. According to the Estates Manager, the total constructed length of the perimeter wall was 694 meters implying that 20% was affected. Scrutiny of engineering reports, supporting documents and inspection of the construction site revealed various anomalies which are outlined in the audit findings below;
Audit findings:
(i) Procurement According to a report issued by the PPDA, the procurement for the construction of the perimeter fence was not conducted in accordance with the PPDA Act, 2003 and the attendant Regulations. The in-house procurement method used was carried out without PPDA approval and the procurement organs established in the PPDA Act such as the PDU and the Contracts Committee were not involved in the procurement.
(ii) Un Authorised Expenditure
Review of expenditure vouchers together with cheque details revealed that a total of Shs.160,393,973 was actually spent on the wall fence contrary to the authorized amount of Shs.126,000,000. The extra amount of
290 Shs.34,393,973 was apparently diverted from the budget item meant for maintenance of university houses and roads. The authority for diversion of funds from one item to the other was not availed for verification. Diversion of approved funds distorts the University budget and indicates breakdown of control over budgetary expenditure.
I urged management to avail authority for diversion of funds from maintenance of university houses and roads to construction of the wall perimeter.
(iii) Irregular Procurement Of Labour
A sum of Shs.19,879,908 was paid to various firms and individuals purportedly for construction labour. However, it is not clear whether a fair price was paid for the labour since there was no competitive bidding and/or prequalification of suppliers. There was no evidence of technical evaluation of the competence of the firms and individuals. The legal status of the firms is also not known. As a result the University may not succeed in holding the other parties liable for work done; neither can it succeed in seeking remedies in court. Moreover in the absence of supervision reports, it is not clear whether the hired labourers were closely monitored during the course of construction. Sourcing of service providers appears to have been a private affair in complete contravention of PPDA Act. It also appears that the original assertion that the estates department had sufficient capacity to carry out the job of building the wall was completely inaccurate. Additional technical anomalies are outlined in paragraph 12.6 of this report.
I advised management to establish the legal status of the service providers and explore the possibility of seeking remedies from them. The works supervisors should also be held responsible for negligence of duty. In future management should abide by PPDA procurement regulations particularly those relating to pre-qualification of service providers.
291 (iv) Procurement Of Building Materials
a) Sand, Stone Dust And Aggregate Stones
A sum of Shs.23,437,280 was paid to two firms for supply of sand, stone dust and aggregate stones without competitive bidding. There was no contract agreement for supply of the materials. The terms and conditions by which university Lorries UG O477E and UG 0315E were used by the firms to ferry sand were not stated.
At delivery the items were neither taken on charge nor recorded at the point of usage. The quantity and quality of materials together with the detailed usage could not be ascertained in the absence of clear records and supervision reports. Further anomalies in the quality of materials are outlined in paragraph 12.6.
Management has been advised to investigate the legal status of the suppliers of materials should be investigated with a view to seeking remedies. I recommend further that the terms and conditions for use of university vehicles should be availed for audit.
b) Cement and Building Blocks
A sum of Shs.15,707,500 was incurred on 752 bags of cement of which 627 bags had been issued for block making and construction of the wall fence at the time of the partial collapse of the wall. In the absence of clear supervision reports and completion certificates, it was not possible to ascertain whether all the cement was utilised.
It was further observed that Shs.5,250,000 was purportedly incurred to purchase building blocks yet cement and sand had been separately issued for block making. Further scrutiny of the record books and goods received notes revealed that 500 blocks
292 purportedly bought from a company on 5/4/2007 for Shs.750,000 were not recorded as delivered. This purchase is therefore doubtful.
I advised management to carry out further investigation to ascertain whether all the cement and building blocks were procured and applied to the intended purpose.
(v) Weaknesses in Record Keeping
The standard of record keeping at the estates department who were the executors of works was found to be inadequate as explained below;
a) The building materials were posted in counter books which do not indicate issues and stock balances sequentially. There is a risk that management would not adequately determine and/or control stocks of materials in the stores and at site, neither would they determine re-order levels, usage rates and the corresponding financial implications.
b) The building blocks made in-house at the estates department were not recorded. Without proper records, the cost of making blocks locally could not be determined for subsequent comparison with buying on the open market.
c) Materials issued from stores were only recorded in the gate pass. Although this serves as a security measure, it is insufficient for determining stock balances and planning purchases.
d) The cash receipts were not supported with payment vouchers. It was not clear whether all purchases were therefore authorized appropriately.
293 I advised management to ensure that proper books of accounts and documents as outlined in the Treasury Accounting Instructions are maintained at the estates department.
(vi) Engineering Anomalies
Review of the technical report prepared by the department of Civil Engineering of Makerere University revealed various technical anomalies which could have caused the wall collapse. These are summarized in the
matrix below. S. Item Consultant’s Actual field Variance Comments No design observations 1. Foundation 690mm wide 600mm wide by 90mm in Shallow size and by 230mm 150 depth width and foundation Depth depth 80 mm in depth resulting depth into weak bearing 2. Concrete Quality of Compromised quality in concrete was structural foundation very low as strength evidenced by ease with which rainfall run-off eroded it while leaving aggregates exposed. 3. Intermediate Entire All these This was columns boundary wall columns were fundamental to be framed omitted and departure from structure with replaced with the consultants’ columns of plain (un specifications. 300mm by 300 reinforced) Eliminating mm in size concrete of columns meant reinforced with 230mm by the entire 4Y16 main 230mm to hold masonry wall bars and R8 and support the lacks a links at metal grilles. stiffening 200mm mechanism to spacing for the resist lateral long columns pressure (wind, and 4Y12 main earth quakes bars for short etc). columns. 4. Masonry 230 mm walls 200 mm walls to Strength and Walls to carry only carry both stability of the their weight. vertical and wall panels was Concrete horizontal loads reduced. columns to resist lateral
294 forces ( wind ,earth tremors etc) 5. Compressive Recommended Actual crushing Deficiency in strength crushing strength ( MPa) strength was strength (MPa) 0.707 76% 3 6. Backfilling Exposed Structural and foundations integrity Drainage after compromised construction. Backfilling and compaction not done. No provision to drain runoff water.
7. Concrete 20 mm Aggregate size Generally the quality in recommended used was concrete used in general 50mm, more the entire than two times construction maximum shows signs of recommended. poor quality. Water to cement ratio was high indicating low cement content evidenced by aggregate completely separating from the concrete mix. A general low strength of the concrete evidenced by the ease with which the mixture could be crushed by hand.
There is need for an engineering analysis to be carried out on the rest of the wall fence to ascertain its strength particularly in respect to:-
• Structural components
• Reinforced columns 295
• Appropriateness of materials such s blocks and concrete in terms of aggregate size, founding soils, mortar joints, etc.
• Adequacy of provision for drainage.
I advised management to consider outsourcing the outstanding works so as to provide for insurance against poor workmanship, where by the contractor would be required to compensate the University in case of defects.
43.13 NORAD Support to Makerere University Institutional Development Programme Phase II
Accountability System. The following anomalies were noted in the projects accountability system for advances: • An amount of Shs.477,650,005 advanced to various activity implementers remained un accounted for by the time of audit in December 2007.
• Management does not carry out an age analysis of the advances so as to be able to follow up advances outstanding for long periods of time.
• Individuals are advanced large sums of monies which they keep for long periods of time; this makes it susceptible to abuse. Delays in accounting for funds may lead to falsification of documents.
Management explained that amounts advanced, in this case, were for research and was 60% of the total research amount and that researches for which the accountabilities have been submitted are those whose activities against the advances were completed.
296 The rest of the researches are on going and the time for completion of the research works has been indicated and it is then that the funds will be accounted for.
I advised management to Institute procedures and controls to track all advances to researchers.
43.14 Developing Capacity to Improve The Quality and Relevant of Education of Health Professionals in Uganda (PROJECT NO: UGA/082-PARTY A GRANT NO:CF 1880)
(a) Bank Reconciliation Statements It was noted that although bank reconciliation statements are prepared they are not checked by a senior officer. This implies that any errors made whether intentional or otherwise, may not be detected and corrected.
Management explained that all reconciliations had been done except that process of checking them had not been completed.
(b) Assessment of Delivery of Output According to the work plan an amount of €576,161 was budgeted to be utilized for the years 1 and 2 of the Project life during the period under review. As at end of year 2 only €.66,372 had been spent as per the final accounts implying that activities are not implemented on schedule and according to Work Plans. This may lead to extending the Project life and extra administrative costs.
During discussions management explained that the Project activities started late in July 2005 instead of January 2005 because the funds were released late. Subsequently, the construction which was supposed to start January 2006, started August 2007 and yet it is the budget line item that takes a lot of money.
297 43.15 Support to Research Activities at Makerere University (SIDA CONTRIBUTION NO: 75007304) (a) Delayed accountability It was noted that there were delays in accounting for funds advanced to activity implementers. For instance, the advances of $259,977 made to various staff had not been accounted for at the time of audit in September, 2007:-
In addition funds expended by the Iganga/Mayuge Demographic Surveillance Site (DSS) for the period covering April, May, and June 2007 amounting to Shs.79,762,921 had not been accounted for. Delays in accounting for funds may lead to falsification of documents.
Management explained that by the time of audit some of the above funds were not yet accounted for, but some were already accounted for, however the accountability reports were not yet filed in the respective individual files.
The accountabilities will be verified in the subsequent audit.
I advised management to ensure that activity implementers account for all the advances.
(b) System of payments It was noted that the project implementers are advanced large sums of money in their personal names. This is risky because large sums of money may be tempting to an individual.
Management explained that researchers are advanced large sums of money in their personal names because of the nature of the research they do. These researchers are advanced funds which they
298 are able to utilize within a maximum of three months. It is only when a researcher has to carry out research out side Uganda that he/she is allowed to have funds to cover the period he/she is to stay out side Uganda in the field. However the steering committee has proposed a form which will work as a contract between the researcher and the program management, stating when to account for funds. It will restrict the researcher to have a maximum of three months to account and submit accountability within two weeks after completion of the activity.
I advised management should advance funds in smaller quantities and then researchers account for these funds before further funding is provided.
(c) Fixed Asset Register It was noted that the following project assets had not been engraved with both the project name and unique identification numbers, at the time of this audit in September 2007:- Item Location i. 3 Generators Faculties of medicine, Technology and Medicine ii. Circulating machine Main Library iii. Laptop Faculty of Computing and IT (Ali Ndiwalana) iv. Colposcope Faculty of Medicine v. LEEP-Unit Faculty of Medicine
This makes it difficult to identify a project asset in case of loss. It was further noted that the Circulating machine procured by the Main Library in the month of November 2006 was not yet operational.
I advised management to ensure that all project assets are engraved soon after delivery.
299 (d) Lack of Segregation of Duties at the DSS It was noted that there is lack of segregation of duties in the accounts section at the Demographic Surveillance Site (DSS). The DSS has one accounts assistant who does the following functions:- • Writing a requisition • Writing cheques • Drawing money from the bank • Paying staff/for activities • Posting the cashbook and • Preparing the Bank Reconciliation Statements. This weakens the internal controls put in place.
I advised management to expedite the recruitment of another Accountant.
(e) Assessment Of Delivery Of Output According to the budget and financial statements, an amount of US$ 4,305,605 was budgeted to be utilized during the period under review. However, only US$2,877,227 (equivalent to 66% of the budget) had been spent by the end of the year. This can imply the following;-
• Low absorption capacity by the project management • Activities are not implemented on schedule • May necessitate extension of the project duration leading to un necessary administrative costs.
Management explained that this was because the starting of Phase II activities was delayed to allow completion of planned activities for Phase I. Phase I activities were extended up to December 2005. This extension has continually affected operations of the two years of Phase II. However looking at the rate at which the activities are 300 being implemented now, it is evident that there is an improvement, we hope that by end of2008 all activities will be on schedule. In fact the absorption rate attained is commendable compared to what happens elsewhere in the country.
I advised management to ensure that funding implementation of activities is done according to the Workplan.
44.0 MBARARA UNIVERSITY
44.1 Pay Disparities Between Academic and Non-academic Staff.
Teaching and non-teaching staff at the university who are employed at similar scales are paid disproportionately to the disadvantage of the latter. The monthly disparity is Shs.54,645,786 which translates into Shs.655,749,432 annually owing to the number of non-teaching staff who are two hundred fifty seven. There is a risk of administrative unrest if the disparity is not addressed. Management explained that in spite of various requests to the Ministry of Finance no solution has been found.
Management should continue liaising with the relevant Ministry to harmonize remuneration of staff who are employed at similar scales.
44.2 Human Resource Management Manual.
The University lacks a human resources management manual that would give guidance on the different aspects of staff administration such as recruitment, promotion, training and staff remuneration.
It was also noted that 15 academic staff and 11 non-academic staff who were due for promotion have stagnated since 2003 due lack of an additional amount of Shs.137,541,846 for their annual remuneration. Besides Seven (7) critical staffing gaps in the areas of Pharmacy, Radiology,
301 Pathology, Psychiatry, Surgery, dentistry and ENT have remained vacant due to lack of funds (Shs.196,742,736) for their annual remuneration.
Management explained that a human resources management manual is in advanced stage of completion and that in spite of requests to ministry of Finance for funding to enable staff recruitment and promotion, none has been granted.
In view of the size, complexity and critical mission of the university, a substantive human resources manual should be developed expeditiously to guide staff management. The University should continue lobbying government for additional funds to facilitate recruitment and promotion of eligible staff.
44.3 Absence of Accounting Manual
In the absence of an Accounting manual, the university lacks clear procedures for treatment of various revenue and expenditure items. The basis of sharing revenues and costs between central administration and income generating units is not documented.
In a written response, management stated that consultations are on-going with Accountant General to resolve the matter.
It is recommended that an accounting manual should be developed to prescribe treatment of the various revenue and expenditure items.
44.4 Community Based medical education funding gap
According to the university Mission statement, the university emphasises science and technology education and its application to community development. Trainee doctors are attached to community health centres as part of community orientation training. However out of the budgeted funds of Shs.40,400,500 for community based education only Shs.22,594,000 was availed leaving a funding gap of Shs.17,806,500 which represents 44% 302 shortfall. Shortfalls in funding impact on the achievement of the training objectives.
Management explained that efforts to solicit funds from Millennium science initiative (MSI) to bridge the funding gap had failed.
The University should liaise with ministry of Finance and other development partners to seek funding for this mission critical activity.
44.5 Unaccounted for Advances.
A sum of Shs.6,136,860 advanced to various officers during the year under review, remained un accounted for at the time of issue of this report contrary to treasury accounting instructions part1 section 217 which require accountability within sixty days. Delays in accounting for advances imply that funds may not have been put to proper use. It may lead to facilitation of accountability.
Accountability for the funds should be provided or else recovery measures be instituted in accordance with the regulations.
44.6 Unaccounted for Research Funds
Research funds amounting to Shs.28,794,980 remained unaccounted for at the time of this report. It was also noted that the university lacks a substantive policy which would guide the management of research activities.
Management explained that a draft research policy has been developed and is due for approval by relevant organs. It was also stated that some research projects are pending accountability because they are incomplete.
Management should put in place guidance on the management of research activities.
303 44.7 Lack of Accountability for Overseas Travel
US $ 2,778 that was paid to a tour firm and one officer to facilitate overseas travel remained unaccounted for at year end. Without original requisitions and approval for travel, acknowledgement from the tour firm and the individual officer together with report of proceedings, I was not able to establish whether the expenditure was rightly spent.
Management was advised to trace the supporting documents.
44.8 Timeline Over-Runs in the Construction of Science Block
The university Science block which has been under construction since the year 2004 has overshot its completion date of 3rd March 2007 by more than seven months. Therefore the estimated 500 science students could not be admitted in the year 2007/2008 due to lack of class and office space.
Management explained that limitation in funding constrained completion of the building.
I have advised management to continue seeking funding from Ministry of Finance and development partners to complete the science block.
44.9 Lack of Approval of the University Budget
There was no evidence that the university budget for financial year 2006/07 had been approved by the Minister of Education and Parliament as required by Sec.62 (1), (3) of the Universities and other tertiary institutions Act despite submissions by the accounting officer. Funds were therefore utilised without necessary approvals.
Prompt scrutiny and approval of budgets of universities should be done to comply with the law.
304 45.0 KYAMBOGO UNIVERSITY
45.1 Unauthorised Expenditure The University incurred an unauthorised expenditure of Shs.1,322,589,358 on employee costs and Shs.2,253,260,224 on goods and services without relevant authority. Excess expenditure is an indication of breakdown of controls over budgetary expenditure. The Accounting Officer explained that the unauthorised expenditure was due to shortfalls in funding on both the wage bill and the non wage bill by Government. Therefore, the University was forced to use its internally generated funds. It was however, noted that excess expenditure on employee costs might have been brought about by the University paying salaries to its lecturers according to qualification rather than University salary scale structure.
I advised the Accounting Officer to pursue the matter with the relevant authorities to regularize the expenditure.
45.2 Funds Unaccounted for It was noted that laxity by the University management in enforcing prompt accountability led to a total of Shs.429,563,516 advanced to various members of staff remaining unaccounted for. The Accounting Officer explained that he had written reminders to the affected staff to submit accountability failure of which he would proceed to recover the funds from their salaries.
45.3 Inconsistency in Salary Structure Examination of the payroll and staff salary structure revealed that the University uses educational qualifications to determine and pay staff salaries contrary to both Public Service Standing Orders and the University Employment Policy which require salary payments to be made according to salary scales. This practice led to disparities in salary payments to staff within the same scales and grades. It led to payment of staff of lower 305 grade with higher qualification higher salary than those holding higher grades. There were also cases of lower grade staff earning equal salary with those of higher grade. These inconsistencies in salary payments partially explain the excess expenditures on employee costs.
I advised the Accounting Officer to streamline the salary structure and pay salaries in accordance with the Public Service Standing Orders and University Employment Policy.
The Accounting Officer explained that the inconsistencies were caused by payment of enhancement money to academic staff as an allowance based on qualification. The decision to pay according to qualification was a result of pressure the academic staff exerted to management. He further explained that the discrepancy was a result of a court judgment which directed the University not to alter entitlements of staff from the former institutions to their disadvantage. However, he promised to streamline the salary payment when the University starts paying consolidated salaries according to scales.
45.4 Violation of PPDA Act In contravention of the provisions of Public Procurement and Disposal of Public Assets Act and regulations, Shs.384,617,017 was advanced to an individual to purchase assorted items for various departments. However, scrutiny of records revealed that out of the total amount advanced, only Shs.187,154,092 was accounted for leaving a balance of Shs.197,462,922 unaccounted for.
The Accounting Officer explained that due to the uniqueness of instructional materials for different departments, the University’s invitations for prequalification for teaching and specialized items were not responded to by the service providers.
306 45.5 Double Payments Examination revealed that payments of Shs.2,300,000 and Shs.120,000 in respect of purchase of teaching materials and plastic carpet respectively were made twice for the same requisition vide cheque Nos.009778 and 009742 for teaching materials and cheque Nos.005367 and 005363 for the plastic carpet. Double payments indicate existence of control weaknesses in the payment system.
The Accounting Officer explained that the double payments were made good by way of having additional supplies made to the University and that the second payment related to the carpet had been paid back to the University.
I have requested the Accounting Officer to provide evidence to that effect.
45.6 Non-Availability of Revenue Receipt Books During audit, the University management did not make available receipt books and cash books in respect of students’ tuition fees and the University farm for verification. Accordingly, I was unable to ascertain the accuracy of internally generated funds as reported in the University’s financial statements.
The Accounting Officer promised to have the receipt books and cash books were available for verification. However, by the time of writing this report, the books had not been produced for audit.
45.7 Stores Management Examination of the stores records revealed services weaknesses in the management of stores. For instance, a review of stores ledgers, menu books and issue vouchers revealed various cases of foodstuffs delivered but not accounted for and not recorded at all in the stores ledgers, doubtful supply of sugar, and doubtful issue of items from the stores. Scrutiny of 12 307 issue books revealed that various items were issued out without being requisitioned for by user departments and authorized by responsible officer. The specific cases of stores irregularities are highlighted below:-
West End Stores • Stores ledgers, the revenue book and the stores issue vouchers in respect of West-End Stores revealed that foodstuffs worth Shs.139,118,684, were not accounted for as a result of shortages in delivery to the kitchen.
• Foodstuffs worth Shs.14,307,500 received from suppliers as per the goods received note and verified by Internal Audit to have been received in good condition were not entered in the stores ledgers. Their utilization could not be verified.
Central Stores • Quantities of sugar worth Shs.3,160,000 issued from Central Stores to the Store-man of North End Stores were neither entered in the ledger card nor issued to the kitchen.
• Purchase of 1500 kilograms of sugar worth Shs.3,530,000 received on goods received note number 10527 dated 12/1/2007 and delivery note number 0381, invoice number 0162 from a local firm appears doubtful as the LPO number 6990 quoted as the order had been cancelled and cash instead advanced to a Procurement Officer to buy sugar because the same supplier refused to supply due to rising prices.
• 1500 kilograms of sugar worth Shs.3,000,000 received on goods received note number 7773 dated 18th July 2007 and delivery note number 197, invoice No.0122 from local firm appears doubtful as the LPO number 6350 quoted as the order was issued to another firm for supply of various sizes of envelops worth Shs.8,947,940. 308
• 1500 kilograms of sugar worth Shs.3,150,000 received on goods received note number 13145 dated 22/06/2007 and delivery note number 099, invoice number 047 from a local firm appears doubtful as the LPO used for ordering the sugar is not disclosed.
• 2,675 kilograms of sugar worth Shs.5,350,000 issued out to various people on 12 stores issue books have no authorized requisition forms. The absence of these records renders the authenticity of such issues doubtful.
North End Stores
• Foodstuffs worth Shs.10,535,300 received from suppliers as per the goods received note and verified by internal audit to have been received in good order are not entered in the stores ledgers. Their utilization could not be verified.
• Foodstuffs worth Shs.61,165,382 remained unaccounted for due to lack of the menu book indicating how the foodstuff was issued to the kitchen and signed for by the head cook on a daily basis.
East End Stores
• Foodstuffs worth Shs.2,493,000 received from suppliers as per the goods received notes and verified by internal audit to have been received in good order were not entered in the stores stock sheet. Their utilization could not be verified.
• East End storekeeper failed to keep stores ledgers for various food items for the period 1st July 2006 to March 2007 rendering audit of stores very difficult.
309 Records also indicate that there was a store breaking and theft case No.CRB 1336/06 where two suspects were to appear in court for court prosecution.
The Accounting Officer promised to carry out comprehensive investigation into the stores mismanagement and inform me of his findings. I have also requested him for an update on the case before court.
45.8 Staffing A review of the staff establishment revealed disparities in staffing of various positions. Whereas positions of Professors, Associate Professors, Senior Lecturers and Lecturers are under-staffed by 151 people, there is over- staffing in the positions of Assistant Lecturers, Teaching Lecturers and Lecturers by 160.
Without proper and adequate staffing it is difficult for the University to effectively discharge its functions.
Management should address this issue urgently as it may have a direct effect on the quality of graduates produced by the University.
The Accounting Officer explained that the under-staffing/over-staffing is mainly due to unavailability of qualified persons in some specific disciplines, inability by the University to attract highly qualified persons because of poor pay and inability for the Appointment Board to recruit new staff and/or promote staff because of the current court injunction arising out of miscellaneous cause No.23 of 2007. The problem was also compounded by the unplanned merger of the three institutions that formed the University.
45.9 Payables At year end the University had arrears of Shs.2,666,271,188, out of which Shs.480,986,455 is owed to National Social Security Fund and 310 Shs.845,848,859 to Uganda Revenue Authority in respect of P.A.Y.E. There is need to source for funding to clear this liability as further delays may lead to penalties.
Management explained that a payment schedule for P.A.Y.E had been agreed with URA
46.0 GULU UNIVERSITY
46.1 Final Accounts The principal books of accounts like cash books, revenue, expenditure and payable ledgers were not properly kept by the University to enable me to ascertain the accuracy of the balances shown in the financial statements reliably.
46.1.1Cash and Cash Equivalents The Statement of Financial Position (Balance sheet) reflects cash balances of Shs.64,624,276. However, this is not supported with a bank reconciliation statement. The balance does not reconcile with the cash flow statement and the statement of reconciliation of movement in cash on Page 11 of the financial statements. I am therefore unable to confirm that the cash balances were correctly stated in the financial statements.
46.1.2Statement of Changes in Equity It was noted that the net worth credit balance of Shs.321,099,274 for the previous year was brought forward in the statement as a debit balance causing an overstatement in the net worth balance carried forward of Shs.642,198,548, hence overstating the closing net worth.
311 46.1.3Bank Loans Disclosed in the Statement of Appropriation account (Page 13) is a loan balance of Shs.132,290,000. However, Note 25 attached to the accounts on Page 46 indicates that loans from commercial banks amounted to Shs.119,640,000. The variance of Shs.12,650,000 was not explained. Whereas the Accounting Officer informed me that the loan was approved by the University Council as a bank overdraft, I did not obtain the Council’s Minutes to confirm that approval.
46.1.4Payables The Statement of Financial Position discloses payables balance of Shs.888,278,281. However, Note 26 to the accounts indicates payables balance of Shs.2,598,675,549, represented by Employees Costs (Shs.1,591,107,268) and committed creditors (Shs.1,007,568,281). The difference of Shs.1,710,397,268 was not explained.
Employee costs include outstanding statutory obligations relating to NSSF (Shs.832,747,304), URA/PAYE (Shs.254,177,072) and Salary Enhancement (Shs.504,182,892).
Unless measures are taken to moderate the pace of expansion and manage operations within the framework of available resources, the University is potentially prone to undesirable litigations, penalties and erratic staff/student strikes.
46.1.5Miscellaneous and Unidentified Revenues Miscellaneous and unidentified revenues amounting to Shs.374,595,200 reported in Note 8 to the accounts was not captured in the Statement of Financial Performance and Cash Flow Statement leading to misstatement of the revenue and cash balances in the two statements.
312 46.2 Poor Internal Controls During the period under review, serious weaknesses were noted in the internal control system which could have severely compromised the safety of the University resources as explained below;
46.2.1Improper Keeping of Vote Control Register (VCR) Proper keeping of the Vote Control Register is a prerequisite for maintaining sound budget discipline and effective implementation of the Commitment Control System (CCS). However, the Vote Book was not properly kept by the University management. For instance, the Accounting Officer was not initialing on entries posted and key attributes such as amount committed, total cumulative commitments and total cumulative payments were never posted. The absence of a vote control register renders control over budgetary expenditure difficult.
46.2.2Implementation of Internal Audit Recommendations It is now good practice to enhance the Internal Audit function by having Audit Committees. In the management of public funds, the requirement of Audit Committees, their duties and responsibilities are detailed in the Public Finance and Accountability Act (and Regulations) 2003. The absence of this committee in the University has rendered the functioning of the internal audit ineffective. For instance it was noted that all recommendations made by Internal Auditor were never acted on by management. It was also noted that the Internal Audit Section is poorly staffed with one person. With the expansion of the University more staff are needed to beef up the Unit.
The Accounting Officer appreciated the role of internal audit and he promised to address weaknesses raised by internal audit in order to improve on the control systems within the Institution.
313 46.2.3Poor Book Keeping Monthly ledgers are not posted accurately and timely. There was slackness in the posting and casting off of the cashbooks and preparation of bank reconciliation statements. Although a number of public works, involving significant sums of capital outlay, had been contracted out and executed, the University did not keep proper contracts registers showing contracted sums, details of works certified and payments to date. Fees registers, utility ledgers, creditors ledgers were all similarly, either not kept at all or poorly kept.
46.2.4Cash Transactions A review of the University’s cash Books revealed that, save for salary payments, payments were predominantly made by cash. In the month of July alone, in one cash book (Account 0140087660803), out of Shs.183,910,394 paid by the University, (Shs.89,833,230) (48%) was cash payment. The practice is not only contrary to existing financial regulations but also exposes the system to the risk of misappropriation of government funds. In any case cash transactions render it difficult to withhold taxes.
I have advised the Accounting Officer to discourage the practice.
46.2.5School Fees Registers In 2005/2006 audit, I did indicate to management that absence of properly kept fees registers limit my ability to perform a comprehensive audit and thus recommended that these registers be kept. Although the Bursar indicated that a task force to have these records written had been instituted, not much had been done. Therefore, I was still not able to confirm whether all fees due and collected are properly accounted for.
The Accounting Officer indicated that school fees registers for financial years 2005/06 and 2006/07 had been updated. However, the registers/ledgers were not produced at the time of verification. 314 46.3 Diversion of Tax Funds It was noted that Treasury released Shs.199,999,666 in respect of non resource taxes on imported machinery and equipment. In accordance with current guidelines the funds were meant to be remitted to Gross Tax Receipts Account in Bank of Uganda. However, the funds were neither remitted nor paid directly to Uganda Revenue Authority. During the audit it was not possible to relate the tax funds to the expenditure. Consequently, Shs.199,999,666 remained unaccounted for.
46.4 Understaffing For its operations, Gulu University has an approved staff structure of 753 comprising 470 teaching and 383 non-teaching staff. Of these, only 170 teaching and 137 non-teaching are in post resulting into a vacancy of 446 posts, representing 60 percent of the approved posts.
Measures should be put in place to improve the staffing position to enable the University achieve its strategic objectives.
46.5 Doubtful Expenditure Documents submitted to audit as accountabilities in respect of payments amounting to Shs.97,603,100 were found not satisfactory.
Verification of accountability documents revealed that some documents used were photocopies while others appeared fictitious. In addition, some funds meant for procurement of supplies which should have been officially tendered out, were drawn in cash by University official and reason (s) to justify the action were not obtained.
46.6 Land Title Although effort has been made by management to acquire title to the 742 acres, for which a lease offer has now been obtained from the District Land Board (DLB), progress has been encumbered by existence of many 315 squatters (bona fide occupants) on the land and uncertainties on availability of sufficient funding for their compensation before eviction.
47.0 MAKERERE UNIVERSITY BUSINESS SCHOOL
47.1 Remittance of PAYE
All emoluments in form of salary and allowances including extra duty and responsibility allowances are subject to PAYE. However, it was observed that PAYE deductions in respect of certain allowances and other earnings were not being appropriately made and remitted to URA. Individual cheques for extra duty and responsibility allowances were paid separately from the payroll and hence not subjected to P.A.Y.E deduction.
An audit by Uganda Revenue Authority of the PAYE position of MUBS for the period from July 2003 to March 2007 ascertained the liability to be Shs.188,565,331 which has since been paid by the University. Included in this figure is Shs.38,833,642 interest incurred due to delays in remittance of PAYE.
This expenditure is considered nugatory as it should have been avoided if the tax law had been complied with.
47.2 Policy on Management Information Systems and Accounting Packages
To make better informed decisions, management has put in place various management information systems that cater for various functions of the organisation. The different information systems have been computerised with a view of improving data processing and accuracy. A review of the information systems and accounting packages used revealed that MUBS implements the following packages:
• Sage package for managing students ledgers 316 • Quick books also for managing students ledgers • Quick pay for processing salaries • Ledger works for financial reporting.
All these packages were purchased off-the-shelf with no customization to the information requirements of MUBS. The following shortcomings were noted:
• The packages do not directly interface with each other to the extent that the salary payments from Quick pay have to be manually entered in Ledger works in order to capture that expenditure for financial reporting.
• Deductions from staff salaries and other emoluments are also entered separately.
• Income from students’ fees has to be manually entered in Ledger works in order to prepare the income statement.
• There are limited controls over the integrity of these packages since they are run independently.
• Manual entry of data into the packages has a negative bearing on the accuracy of the final information output.
This has led to duplication of processes and failure to achieve the desired efficiencies from the use of the software. It has also led to weaknesses in controls over expenditure and IT resources.
There is need for integration of these packages to achieve the desired efficiencies.
317 The Accounting Officer explained that through a World Bank funded Project to help African Universities to computerize a software called SOCKETWORKS had been procured to address the problem and was expected to be operational by January 2008.
47.3 Absence of Human Resource Manual The Business School does not have an approved human resource manual to guide the management of the human resource function. This may lead to use of inappropriate recruitment and remuneration methods which can ultimately hamper effective service delivery.
The Accounting Officer explained that the management of the human resource function is guided by the institution’s human resource policies. I have however advised that a manual be put in place to facilitate the implementation of the policies set up by the council.
48.0 MULAGO HOSPITAL
48.1 Domestic Arrears for Utilities Domestic arrears for utilities (water and electricity) for the financial years 2005/2006 and2006/2007 are reported at Shs.2,945,572,895. However, review of the bills and statements from the utility companies reflected a total of Shs.2,643,122,039 as outstanding as at 30/6/2007. Therefore the payables reported in the accounts appear to be overstated by Shs.302,450,856.
Meanwhile, a total of Shs.634,347,291 paid for utilities during the financial year lacked supporting documents such as monthly bills and receipts.
The Accounting Officer is advised to regularly reconcile the utility records with the service provider. Meanwhile supporting documents for the amount paid should be traced for further verification.
318 48.2 Nugatory Expenditure A total of Shs.1,096,309,339 was paid to a construction company in settlement of domestic arrears relating to unpaid certificates. Included in the payment was an amount of Shs.88,547,361 that was paid in respect of interest charges and litigation costs which is considered to be nugatory in nature as it could have been avoided had the Hospital settled the outstanding certificates in time.
The Accounting Officer explained that Ministry of Finance did not release funds to pay the firm despite his requests to the Ministry.
48.3 Uncollected Non-Tax Revenue Arrears of Revenue from the private patients’ scheme at the close of the financial stood at Shs.1,339,283,965. Of the outstanding amount of Shs.995,390,763 from the previous year, only Shs.102,173,650 was settled during the year, indicating weaknesses in debt collection. The hospital does not have a debt collection policy and it is not certain whether this debt is collectable.
Much of these debts are owed by government ministries and departments with Ministry of Defence alone owing the hospital a total of Shs.1,078,568,890 of the total outstanding amount.
Continuing to offer private medical services which are not paid for constrains service delivery and may encroach on facilities meant for general patients.
The Accounting Officer explained that Ministry of Defence had verified their bills and promised to pay and that meanwhile services to the Ministry had been suspended.
319 I advised the hospital management to set up a clear policy on debt collection and ensure that all outstanding amounts are collected.
48.4 Lack of Authentic Valid Contracts for Service Providers The Public Procurement and Disposal of Assets (PPDA) Act require that all government procurements and disposal of goods and services above the threshold should be backed by authentic valid contracts. To the contrary, payments amounting to Shs.61,405,320 were made to a security firm without valid contracts to spell out the terms and conditions of the firm’s engagement.
The Accounting Officer attributed this lapse to delay in processing the contracts by the office of the Solicitor General.
48.5 Rented Accommodation A total of Shs.63,979,000 was paid to various landlords for accommodation of various hospital expatriates during the period January-December 2006. It was however observed that there is an incomplete Guest House building under construction, which requires completion so as to alleviate the accommodation needs. No budget has been forwarded in the recent past towards its completion. In his reply, the Accounting Officer explained that the hostel was not meant for staff accommodation but rather an income generating project under the private patients’ scheme. He further explained that for over 2000 staff, there are about only 600 housing units, which are not adequate for the hospital accommodation needs.
The Accounting Officer is advised to explore the possibility of putting up more housing units for staff and, also further follow up the matters concerning ownership of the nearby land occupied by the Ministry of Defence (CMI).
48.6 Flouting of Procurement Procedures Contrary to the Procurement Law and Regulations, Procurements totalling to Shs.1,223,974,032 were made without valid authority or no authority at 320 all from the Contracts Committee. Of the above amount, contracts worth 685,985,032, had their authority expired and not revalidated while those without authority at all amounted to Shs.592,985,032. It was therefore not possible to establish the method of procurement used for those lacking authority.
The Accounting Officer attributed the anomalies to emergencies especially for drugs and sundries that require timely action. He further stated that there was revalidation by the Contracts Committee. However, details of this revalidation have not been availed for audit.
48.7 Withholding Tax Deductions (a) Selective deduction of WHT from drug suppliers Contrary to the Income Tax Act, Sec.120 (1-5) all suppliers dealing in drugs and accessories are exempted from WHT payment. Contrary to this provision, the hospital selectively deducted a total of shs.48,484,697 as WHT from suppliers of medical drugs and accessories. A number of others supplying similar items had their full payments made without subjecting them to WHT deductions. The criterion used to deduct WHT from particular suppliers and exempt others is not clear. The hospital risks litigations from firms that are affected by these unlawful deductions.
The Accounting Officer explained that this was an oversight and promised to consistently apply the law.
(b) Lack of Acknowledgement Receipts A total of Shs.456,668,007 purportedly remitted to Uganda Revenue Authority as deductions from various payments to suppliers was not supported by receipts as proof that these funds were actually received, by Uganda Revenue Authority.
321 (c) Non Deduction of WHT A total of Shs.36,403,408 was not deducted from various supplies of goods and services to the hospital as required by the tax law.
48.8 Expired Drugs A number of expired drugs stacked in boxes, without values attached, are held up in various stores/containers in the hospital. Accessibility to these places where the expired drugs are kept is limited because of the way they have been piled up. Some of the stores cannot even be accessed or opened. Scrap wheel chairs, old basins, beds furniture and equipment are dumped haphazardly in the same stores.
Some of the expired drugs were impounded and kept by URA for a long time and later “donated” to the hospital at the time they were expiring. A lot of space which would otherwise be available for other purposes is currently holding expired drugs. The hospital will also eventually incur costs for destroying such drugs. Continued keeping of expired drugs in the hospital facilities may be a great risk to both the hospital staff and patients if no urgent plans are made to dispose them off.
The Accounting explained that most of the expired drugs are drug donations with short shelf life that
48.9 Environmental Audit on Management and Disposal of Waste An environmental audit on waste management and disposal in Mulago Hospital Complex was carried out between January and March 2008. A separate report was issued to management. Here below is the summary of the significant audit findings made:-
48.9.1. Medical waste policies and strategies It was noted that Mulago Hospital does not have a hospital waste management policy and strategy. The policy would address issues like: identify all the stages of the waste stream; measures to be undertaken to
322 ensure waste prevention; the different types of waste and how to handle each type; segregation of waste; compliance with existing laws and regulations as well as a clear definition of principles to be followed. In addition, the policy would identify all the possible risks related with medical waste management and give guidance on how to manage those risks.
It is important that the hospital sets up a policy and strategy to enable uniform implementation of its waste management initiatives and ensure compliance to the national laws and regulations.
48.9.2 Limited access to Legislation and guidelines It was also noted that there is no direct access to a data base of the legislation, regulations and procedures relating to waste management, thus making it impossible for all potential role players in waste management to acquaint themselves with the legislation and guidelines. For instance in the X ray unit, the international guideline for handling nuclear materials was being kept by the head of the unit who had been away for over a week by the time of our audit visit. No user copies of the legislation and regulations have been availed to the users.
Management is urged to ensure that access to the applicable legislation is available to all staff of the hospital.
48.9.3 Lack of awareness of the legislation and guidelines in place It has been noted that there is lack of awareness by the hospital staff of the legislation relating to Medical waste. For example although there are National Environment (waste management) regulations 1999, issued by NEMA, staff at the wards were not aware of the regulation.
It was also noted that Mulago hospital guidelines on waste management have been in draft form since 2006 and most staff are not aware of them.
323 This implies that any adherence to the regulations and guidelines in place is coincidental rather than planned. It is important that all staff are made aware of all the stipulated regulations and guidelines to be followed while handling all types of waste so as to ensure compliance.
48.9.4Internal medical waste control systems It was noted that there are no documented internal medical waste control systems in the hospital. All staff interviewed acknowledged the fact that there was no written waste management system. Such a system would guide staff on issues like waste segregation, storage, transporting, and disposal and also allocate responsibilities to specific staff members regarding their respective roles concerning the management of medical waste.
Management is advised to urgently set up and document its internal waste control system.
48.10 Monitoring (a) External Monitoring The National Environment Management Authority (NEMA) is a body that was established by an Act of parliament as the principal agency in charge of coordination, monitoring and supervision of all environmental management issues in the country. NEMA does this in coordination with the district Environmental officer’s resident in every district in the country. However, it was noted that there was no evidence that the hospital had received any monitoring visits either directly by NEMA staff or by the District Environment Officers.
This implies that the hospital did not receive the necessary technical guidance that would be derived from the monitoring visits to enable management take corrective or preventive action where possible.
324 (b) Internal Monitoring It was further noted that internal monitoring is largely inadequate. • Although there is a committee on infection control, there is no evidence that it is operational. • There is no evidence that the private firm that collects and disposes the waste is supervised as no reports were availed. • Waste at the storage area is handled in a very dangerous manner; and this further proves that no one supervises the processes at the store/ incinerator before it’s taken out of the hospital.
Management is advised to set up a monitoring mechanism to ensure proper management and disposal of waste.
48.11 Staff Protection The following observations regarding use of protective gear were noted during inspection of some of the hospital wards:- • At the labour ward, staff are not supplied with masks and gaggles to protect their faces from infectious fluids that patients discharge. • Gloves are inadequately supplied and patients are asked to provide their own for use by the hospital staff for any emergencies however, the quality of the gloves out sourced from patients, cannot be relied on leading to exposure of staff to infections. • Staff at the highly infectious ward (ward 4A), are not given any extra clothing protection, given the infections they are constantly exposed to. • The emergency centre that handles staff who may get pricked accidentally i.e. Post Exposure Prophylaxis (PEP) is closed over the weekends. This reduces the effectiveness of the unit and leaves staff vulnerable to infections that could have been avoided. • Also noted was the fact that ward cleaners are inadequately protected as many were found using surgical gloves instead of heavy duty gloves while cleaning the wards and collecting waste which at the end of the
325 day exposes them to a lot of infections. Efforts to talk to their supervisors were futile.
It is important that the use of protective clothing is emphasised for all staff especially those working in the highly infectious wards to avoid any possible infections that may result from handling infectious waste.
48.12 Procurement The following procurement issues were noted as having an effect on waste management and disposal:- • Disinfectants like jik and precepts are sometimes not adequate. Placentas and other dangerous waste are therefore not disinfected as is supposed to be the case, before their disposal. • The waste bins procured are inappropriate. It was noted that 50 litre waste bins (for storage at source) and 100 litre bins (for transportation) were purchased instead of 70 - litre and 100 - litre respectively. This may partly explain the overflow of some waste bins in the wards that was found at the time of audit.
Management is advised to ensure that the above issues are addressed.
48.13 Old and Obsolete Equipment It was noted that management does not have any disposal plans for old and obsolete equipment. A lot of old unused and obsolete hospital equipment is currently being stored at the hospital. These include old computers and old x-ray machines which for instance may emit dangerous radioactive materials thus becoming dangerous waste in the hospital.
Management is advised to dispose all the old and obsolete equipment currently stored at the hospital.
326 48.14 Drugs store During inspection of the drugs bulky store, it was noted that there are no compartments, bin/stock cards and labels to show the names and quantities of drugs by type/categories held at any one time in the store. Boxes of drugs were found heaped on the dirty floor making the store look very untidy, and which can lead to generation of more waste as a result of drugs getting spoilt. Management is advised to ensure that compartments are set up in the store and that an appropriate environment is established in order to effectively manage all drugs.
48.15 Waste Separation As a matter of best practice, it is normally recommended that hospital waste is separated at the point of its generation; since disposal methods of each waste are different (i.e. general waste can be disposed at a landfill, whereas the infectious and hazardous waste has to be incinerated). The generators of medical waste should separate the waste at the point of generation to enable this to be applied. However, the following was noted.
(i) Separation of waste is not regularly done. This has lead to an accumulation of high quantities of waste that has to be incinerated. Since incineration is expensive (in terms of fuel costs for operating the incinerator), this implies that the incinerator operating costs are high because of un-necessary burning of other general waste. This could substantially be reduced if proper separation is adhered to.
(ii) Waste that is separated at the wards is again put together (mixed) on transportation and re sorted at the incinerator by the incinerator operator. This complicates the incinerator operators’ job, as he has to try and separate the waste at this point.
327 Management is advised to ensure strict separation of waste through out the whole waste stream (i.e. from generation, collection, transportation and disposal of waste).
49.0 BUTABIKA HOSPITAL
49.1 Nugatory Expenditure A contractor was paid Shs.350,231,291 in March 2007, as outstanding duties and taxes plus interest on delayed payments of earlier certificates. Included in the amount is a sum of Shs.106,799,214 paid in respect of interest accumulated as a result of delayed settlement of outstanding certificates. The expenditure is considered nugatory as the interest payment could have been avoided if the certificates were settled in time.
49.2 Hospital Land As previously reported, the Hospital’s original land of 656 acres was parcelled out and the biggest chunk given to private developers by the Uganda Land Commission in 2003/2004. However, I am unable to confirm that the Hospital now properly owns the remaining part of the land because of lack of a certified copy of the land title.
In my discussions with the Hospital management, it was explained that the Hospital has not been able to secure a certified copy of the land title inspite of several attempts to request for it. I advised the Accounting Officer to continue liaising with Uganda Land Commission by involving higher authorities to obtain a copy of the land title for the Hospital land.
49.3 Human Resource
(i) Unfilled Vacancies
A review of the Hospital staff list revealed that out of 430 approved positions only 314 were filled leaving 116 posts vacant.
328 The division of mental health that is core to service delivery has an approved structure of 40, but, only 23 are filled (58%). Of the three approved posts for senior consultants, only one post is filled. Other key positions that are vacant include:-
• Principal Psychiatric Officer • Principal Clinical Psychologist • Senior Clinical Officers and • Senior Clinical Psychologist • Anaesthetic Officer • Theatre Attendant.
The Accounting Officer explained that he had identified and submitted to the Health Service Commission all vacant posts for filling and adverts made in 2007, I am yet to be furnished with the outcomes. I advised the Accounting Officer to keep pressing the relevant Commissions for optimal staffing of the Hospital.
(ii) Inadequate Structure
The structure of Butabika hospital appears to be inadequate to address its current needs. For instance according to the Assistant Commissioner Nursing, although the ideal ratio of nurses to patients is 1:3 in practice the ratio is sometimes as high as 1:70.
The Hospital has a fleet of 11 vehicles but there are only 7 approved positions for drivers list of which only 3 are filled.
It was also observed that the hospital operates an Outpatient’s Clinic that has been opened to the public. However, there is no provision for additional staff to cater for the increased work load. The Accounting Officer explained that Ministries of health and Public Service initiated a restructuring process intended to rationalise staff structures in hospitals but 329 the process has been rather slow. It is hoped that current needs of the hospital will be addressed during the restructuring process.
(iii) Unconfirmed Staff A review of a sample of 37 personal files indicated that 15 staff are not confirmed despite having served for more than 2 years probation. Furthermore, it was noted that although the staff list had indicated most employees as confirmed, audit tests showed that 14 staff members declared confirmed were actually not confirmed. The Accounting Officer attributed this to understaffing in the Personnel Office that lacked a Senior Personnel officer for a long time. He further stated that he expected this status to change after an experienced Senior Personnel Officer was posted to the Hospital.
(v) Incomplete Records in Personal Files Open personal files contained very few documents, mainly the most current such as recent appointment letters, leave forms and pay change reports leaving out most of the historic records of the staff.
The Accounting Officer explained that these records used to be maintained by the mother Ministry (MOH) which had retained the human resource function. With establishment of the function at the Hospital, records could not be released because of lack of a secure registry. I advised him to expedite the process of establishing a secure registry in the Hospital and have all the staff records still lying with the Ministry transferred to the Hospital.
49.4 X-ray Machine During the year the Hospital procured an X-Ray machine, Comprehensive X-Ray Unit, at a sum of Shs.119,556,139.
330 An audit inspection of the X-ray Unit, revealed that the machine did not meet the required standards, according to the technical vetting committee. It was not approved for use in the Hospital and has therefore remained idle. The Accounting Officer explained that most of the X-ray equipment was cleared except the examination couch, surgeon tools, linen trolleys, the 2 X-ray units and the ultra sound set. He further stated that supplier was contacted and requested to re-supply the parts that were rejected. This had not been done by the time of writing my report.
50.0 ARUA HOSPITAL
50.1 Staff Establishment The staff establishment set more than ten years ago has not been revised to match the ever increasing demand for medical services by the population.
The current establishment list shows that 331 posts are approved of which 306 are filled creating staffing gaps in key posts such as Doctors, Radiography, Pharmacy and Finance & administration. Although the staff list indicates overstaffing in other areas such as nursing (overstaffed by 59 staff), the staff available is too thin on the ground.
Understaffing in key areas that are fundamental for effective and efficient delivery of the required services undermines the reasons for which the hospital was made a Regional Referral Hospital.
For instance, busy as it is, the assessment centre is staffed with only three clinical officers, one for the under fives and two for the adults and the three have to assess hundreds of patients daily. With the standard requirement that a patient be assessed for a minimum of 15 minutes, it is doubtful whether this is achieved and patients given sufficient attention. At the time
331 of Inspection in the afternoon more than 50 people were in the queue to see one clinical officer.
Currently the pharmacy is inadequately staffed and is manned by one person who is a dispenser. This greatly affects not only the operations of the pharmacy. The Dispenser is only assisted by an office messenger who was found, at the time of inspection, counting drugs with bear hands, a practice that may contaminate the drugs and put the lives of patients at risk.
The Accounting Officer explained that it has become difficult to retain staff because of lack of accommodation and yet the budget does not provide for housing allowances. He further stated that Pharmacists could not be retained because there are private pharmacies for them to supervise in Arua.
There is an urgent need for hospital management, together with the concerned authorities to review the current staff establishment in view of the increasing demands for health services by the population and then sufficiently staff the hospital with the appropriate numbers and technical skills.
Equally, there is need to budget for staff accommodation in form of either allowances or direct renting in the short term and/or construct staff houses in the medium term, to be able to attract and retain qualified staff.
50.2 Status of the Hospital Infrastructure The hospital was established in 1937 and upgraded to serve as a regional referral hospital in 1996, and currently serves the districts of Arua, Nebbi, Moyo, Koboko, Yumbe, Adjumani and foreigners from DRC and Sudan. It also serves as the district hospital for Arua district and other surrounding districts which do not have district hospitals. Despite its catchment area 332 with a large population, the hospital infrastructure which was planned more than seventy years ago has not changed. i) Out Patients Department. This is the reception and assessment centre for all patients. Patients with minor ailments are treated here and discharged while those who require specialized treatment or admission are sent to the respective department or ward. An audit inspection of the OPD showed the following.
• The department, important as it is, operates in small and dilapidated structure with many cracks on the ceiling and walls, constructed in the 1930s for a small number of patients. The status of the building is a threat to the staff and patients. • All the storage facilities in the various offices are too old and require immediate replacement. • There is no adequate space for the casualty cases with only two small rooms equipped with two beds which were all occupied at the time of the inspection. Indeed this facility was proved to be very insufficient on the 13th Nov, when about eight accident victims were brought in and were given first aid outside on cement slabs used as benches for patients. • The minor theater for handling minor operations is inadequately equipped with old and broken equipment, with crumbling walls and ceiling.
The accounting Officer explained that he has taken efforts to provide protective clothing to staff and that the hospital management together with corporate bodies in Arua were in a fundraising drive to equip the minor theatre in the OPD as part of Public-Private partnership.
333 ii) Female, Male, Paedriatic and Surgical Wards Following the condemnation of the medical ward more than five years ago, a few wards were left available for accommodation of patients. This has led to overcrowding in the few available wards where some of the patients are floor cases while others have had to occupy the corridors. For example, the surgical ward that has a bed capacity of 22 beds was found with 41 beds excluding floor cases and more patients were being admitted. This is made worse at night when attendants have to compete for the available space.
This overcrowding may facilitate disease transmission. The situation is made worse by lack of modern equipment for use by the medical workers, for example, all autoclaves are non functional in the wards and instead charcoal stoves are used for sterilisation of equipment. Such methods may not achieve the degree of sterilisation required.
Sterilisation method used in the ward
Urgent reconstruction of the condemned ward will ease on the congestion in these other wards. iii) Maternity Ward The maternity ward operates with only three delivery beds and one improvised coach instead of the required eight beds. Use of
334 examination coach as delivery bed puts the lives of the mothers and their babies at risk. The neonatal unit has only two functional incubators but lack of power for 24 hours constrains their use and cases of pre-mature births are referred to a private hospital-Kuluva Hospital. iv) Private Ward The private ward has only 6 single rooms and other services are provided from other departments that are scattered in different locations. There is need to provide a one stop centre for the private patients and reduce congestion at the other centers.
The Accounting Officer explained that although management has set aside land for a private wing, lack of funds has hampered its development and even the little that is collected is required to be remitted to the UCF under the Non Tax Revenue guidelines. v) Regional Mechanical Workshop This workshop is meant to repair medical equipment for all hospitals and health centers in the region. Funding is by contribution from the respective hospitals and health centers and districts. However the following were noted:-
• Hospitals and health centers are not up to-date with their contributions and this is affecting its operations. • The work shop seems to be engaged in doing work for private clients. This was noted by the Board in its meeting of 16th Aug 2007 and an audit inspection of the workshop also confirmed this. Over 50 vehicle and motor cycle batteries were found being recharged for private clients using the hospital power and workshop facilities.
335
Motor cycle and car batteries being charged at the workshop
The Accounting Officer explained that funding through contributions from hospitals and health centers has proved ineffective and makes planning difficult. There is need to design an effective method to fund the workshop activities. vi) Location of Incinerator and medical waste disposal An incinerator for the hospital to dispose off medical waste was constructed near other hospital facilities such as the regional mechanical workshop, the private wing and the training school. The fumes and gases are blown back to the hospital and are a health hazard to both the medical workers and the patients. Pic showing the location just outside the fence is below:
336
Location of incinerator near the hospital fence
The Accounting Officer explained that the location is in itself not a problem but the design was wrong which led to burning of medical waste other than actual incineration which is supposed to generate temperatures above 800 degrees centigrade. He stated that a technical review was being carried out by MSF France to have the problem rectified and the hospital management was lobbying World Health Organisation for assistance in waste management. vii) Sewerage system and sanitary facilities The sewerage system and sanitary facilities in the hospital are as old as the hospital itself. With time, the pipes age and often break down and with the increasing hospital population, they have also become very inadequate.
The Accounting Officer explained that there is need to overhaul the entire system and even construct a lagoon for proper waste management and disposal.
337 50.3 Other Non Current Assets a) Obsolete/Old Equipment and Vehicles The hospital does not have any policy on the obsolete/old equipment and vehicles. Irreparable equipment and vehicles are damped/piled in different locations of the hospital compound while others have remained in various wards and offices.
Management explained that they are in the process of initiating the disposal of this old/obsolete equipment. The out outcome of this process is awaited.
b) Land Although the hospital land has been surveyed a land title is yet to be obtained. The survey established that the hospital land has been encroached on by people who have constructed permanent houses. There is need to urgently acquire the land title and fence all the land that belongs to the hospital.
The Accounting Officer stated that submissions to the Uganda Land commission have been made for the land title. He further explained that encroachers who have settled on the land need a lot of money to be compensated and the hospital does not have this money.
50.4 Stores The hospital procures and receives drugs and sundries from various sources including JMS, NMS, private suppliers and donors. However an audit inspection of the stores facility revealed the following:
a) Inadequate Space The space available in the store is not enough to keep all the drugs and sundries. As a result a number of items in boxes are piled over others in the available space. This may cause damage to some of 338 the items or spoil the drugs. A case of boxes of computers, recalled gloves and infusion sets piled on top of each other was particularly noted as shown in the photographs below.
b) Donation of Non Functional Equipment Included in the boxes piled over each other were computers donated by the Rotary club of Canada. The computers are old and failed to function yet they are occupying space in the stores. It is not known why the authorities allowed the donation to the hospital, which is already having problems in disposing off its own old equipment. Acceptance of such donations is using the hospital as a dumping ground. Donations to government institutions should be properly screened to avoid using them as dumping grounds for items that are hazardous to environment.
339 c) Poorly Ventilated Stores The structure where the stores are housed lacks proper ventilation with only small ventilators which do not allow enough aeration. This may cause damage to the drugs and sundries which are kept there for a long period, causing danger to the patients’ lives. Example of the small ventilator is as in the picture below.
d) Record Keeping and Stores Management Paragraph 507 of the TAIs requires entries for receipts and issues to be made in the ledger promptly at all times to correctly reflect the amount held in stock. Contrary to this requirement, it was noted that the ledgers are not regularly updated and as at 13th Nov 07, all receipts and issues for the previous three weeks had not been posted. Although this was attributed to lack of manpower in the stores, it was established that it was mainly due to lack of close supervision and internal monitoring system.
340 e) Pharmacy From the stores, drugs are mainly issued to the pharmacy from where wards and other end users requisition for their daily drug needs. It is expected that proper records such as stock cards are maintained at the pharmacy to keep track of the drugs received from the stores and how they are distributed to other users. However, an audit inspection of the pharmacy on 13th November 2007 revealed that the stock cards were last updated on various dates ranging from June to October 2006. No stock cards have been maintained for the entire 2007. The officer in charge attributed this to lack of adequate manpower in the pharmacy department and in the circumstances it was not possible to confirm that all the drugs requisitioned from the stores were actually received in the pharmacy and properly dispensed to the patients/ distributed to other end user.
f) Expired drugs Found in the stores are 31,200 expired ARVS-Lamivudine Niverapine Trimune 30 mg expired tablets. These tablets were delivered to the hospital from National Medical Stores in June 2006 when they had actually expired two months earlier in April. Because of lack of storage space these drugs together with three boxes of recalled gloves are still kept in the drugs stores. The reason why National Medical Stores had to damp expired drugs in the hospital and failing to take them back for destruction is not known. Continued keeping of such expired drugs together with good ones in the same store is irregular.
50.5 Cleaning services The hospital pre-qualified and contracted one firm, Lake Foods and Traders to provide cleaning services for the wards at a monthly fee of Shs.2,800,000, (Shs.33,600,000 p.a). However, the payments are effected without proper certification. There seems to be no responsible officer for 341 the supervision of the cleaning works. An audit inspection of the wards and other facilities showed that the floors are not properly scrubbed and cob webs were hanging in all the OPD facilities and wards except the maternity ward.
51.0 GULU HOSPITAL
51.1 Staff Establishment Although the status of staffing improved after the posting of 54 staff, many of the key posts remained vacant by the time of writing this report. The total number of vacant posts as at October 2007 was 105 representing 33% of the approved structure of 336. It was also reported that the existing structure is not adequate to address the current needs of the hospital. It was noted that the current staffing position at the hospital affects the effective delivery of services to the public since this is a referral hospital servicing the whole northern regions.
It was further noted that the stores department was greatly under staffed. The officer in charge complained that he is overwhelmed with work. According to Hospital establishment structure the department is supposed to be manned by 5 staff but instead only 2 staff were posted.
The Accounting Officer explained that the Health Service Commission had advertised for the vacant posts and that the process of filling them was ongoing.
51.2 Waste Disposal The Accounting Officer has indicated that the incinerator that was constructed is of small capacity and hence cannot handle the rising volumes of waste from the hospital. There is also no place where to dispose off non-medical waste. The mortuary is a room which is not refrigerated yet it
342 handles so many dead bodies. There is need for funding to enable the hospital address the problem.
52.0 JINJA HOSPITAL
52.1 Excess Expenditure The hospital incurred expenditure of Shs.348,976,262 in excess of the approved budget appropriations without relevant authority. This affected employee costs (Shs.98,436,683) and goods and services (Shs.250,484,579). I have advised the Accounting Officer to regularize the expenditure in accordance with the law.
52.2 Unsupported Purchases A total of Shs.265,480,889 was paid for various procurements out of which procurements worth Shs.94,981,042 were not supported by documents like local purchase orders and Goods Received notes.
In the absence of supporting documents, I was not able to confirm that the procurements were properly authorized received and utilized for the intended purpose.
Although the Accounting officer later explained that the documents were in stores, they were still not presented for verification.
52.3 Lack of Capital Development The Hospital continued to operate without capital development budget for major repairs and procurement of new equipment and vehicles. Although the hospital is a separate vote, the capital development budget continued to be operated by the mother Ministry (MOH).
343 • Buildings The Hospital lacks funds for capital development to procure new equipment and maintain its infrastructure. As a result, doctors offices are located in a dilapidated building. This building has never been repaired since it last housed the first medical doctor of the Hospital in the 1960’s. The continuous use of such buildings that are in a sorry state is a risk to the lives of the users. Photographs are attached showing the status of some of the hospital structures.
• Equipment and Ambulance The equipment is inadequate and the existing ones obsolete as most of them were acquired in the 1930’s. There is generally lack of modern equipment and an ambulance for the Referral hospital.
• Staff/Patient Accommodation Some wards were filled to capacity. Patients admitted were found in the corridors especially in the maternity wards leaving no passage for movement of the medical staff. Some wards are in a sorry state especially the psychiatric ward. The ceilings for the room in family planning are leaking and the walls had cracks. There were also no walk ways from some of the theatres to the wards.
Similarly, there is acute lack of staff accommodation especially for the specialized staff whose services are required 24 hours. This type of staff cadre especially doctors need to reside within the hospital but this is not possible and even those few houses that do exist are dilapidated. It is very difficult to attract suitable specialized staff in such un- conducive environment.
344 • Hospital Land The Hospital does not have a title for its land. I am therefore not able to confirm that the piece of land where the hospital is located belongs to the hospital.
Old Building housing Doctors’ offices –Front view
345
Old Building housing Doctors’ offices –Rear view
Old building housing the Hospital’s main Theater
346
Old building with Asbestos sheets, housing the Hospital’s Main Laboratory
The Psychiatric Ward
347
Part of the Ceiling in the Psychiatric Ward
Another Part of the Ceiling in the Psychiatric Ward
348
Main Administration Block not renovated for a long time
Asbestos sheets, though no longer in use is a common feature of the hospital’s roofs
349 53.0 LIRA HOSPITAL
53.1 Understaffing
Lira Referral Hospital is severely understaffed which is likely to impact negatively on the Hospital’s ability to deliver the required health services. For example, out of 297 approved posts, 103 posts are vacant.
Posts of salary scale U4 and above are the most affected. Insufficient recruitment coupled with poor working conditions faced by staff cause resignations and absconding and poor services.
There is need for government to recruit more staff for the Referral Hospital and provide adequate funding to cater for improved environment and working conditions in the Hospital.
53.2 Lack of Ambulance, Vehicles, Presence of Obsolete Equipment
Lira Referral Hospital has no ambulance to transport patients yet it operates in over five districts. It was reported that the new Ambulance meant for the hospital was taken by District Health Office and has refused to hand it over back. It also lacks motor vehicles for efficient operation. Hospital equipment is very old and obsolete making work very difficult.
The buildings are also very old and in dire need of extensive renovation. The working environment especially for the technical staff is generally not conducive. Under funding of the Referral Hospital by government for both recurrent and capital expenditure may be the cause for the needy situation the hospital is in.
Government should provide adequate funding to cover operating costs, as well as renovation of the infrastructure and acquisition of adequate
350 transport facilities for both technical staff and patients. Management should continue pursuing for adequate funding for the Hospital.
53.3 Waste Disposal The hospital does not have a functioning incinerator. The one available got burnt by fire and broke down three years ago. Disposal is by way of pit which is considered to be an inappropriate method of waste disposal.
There is need for funds to enable the hospital put up an incinerator and hence improve on the waste disposal system.
54.0 MASAKA HOSPITAL
54.1 Lack of Capital Budget The Hospital operates without any capital development budget. This has led to lack of major repairs and maintenance of the hospital infrastructure and expansion programs. The following observations are largely attributed to this, and the photos on pages illustrate the state of the hospital infrastructure.
54.1.1 Hospital Infrastructure- Buildings The Hospital has not had any expansion program since it was turned into a regional referral Hospital. The available infrastructure does not match the increase in responsibility/number of patients and has led to accommodation crisis. This was evidenced from the over crowded maternity wards which were supposed to accommodate 70 patients but had 77 at the time of inspection thus forcing some of the patients to sleep on the floor.
54.1.2 Lack of Mortuary Facilities The Hospital does not have a mortuary facility of its own and as such dead bodies are moved to a nearby isolated old building belonging to the Municipal Council Authorities. This structure is too old and lacks basic 351 mortuary facilities, appears abandoned and has not been renovated in the recent past.
54.1.3 Shortage and Use of Faulty Equipment The Hospital has a number of auto claves that are faulty and un-repairable. This forces staff in most wards and departments which are incapacitated to use the one in the main theatre or the boiler. For example, the oxygen concentrator of the Emergency and Accident room was faulty and the maternity wards consisting of wards 9, 10, 11 and a minor theatre had a non functional auto clave on the day of inspection but had admitted 77 patients. Its sterilizer was also faulty. The Dental clinic had none and relied on the boiler. The continuous shortage and use of faulty equipment leads to poor service delivery and puts the lives of both the medical staff and patients at a great risk.
54.1.4Inadequate Theatre Facilities The Hospital has one main theatre which is normally overwhelmed with numbers as the minor theatre was out of service due to its current sorry state, and had been turned into a records room.
The main theatre is also neither well equipped nor well maintained and lacks basic equipment like auto claves. There is lack of proper air conditioning facilities and suitable walk-ways to the theatre.
With its two operating rooms of one bed each, one room had no operating lights which forced the Doctors to use an improvised lighting (a single spot light). In addition, the very old operating beds are used by 6 to 8 patients per day. The minor theatre in the Emergency and Accident room is also not operational due to lack of equipment. A referral hospital with inadequate theatre facilities that are neither well-equipped nor well maintained cannot offer the necessary services.
352 54.1.5 The Hospital Incinerator An incinerator was constructed for the hospital during the year under review - courtesy of the Ministry of Health. However, it collapsed before it was handed over to the Hospital authorities and has not been reconstructed.
The collapse was attributed to poor workmanship and materials and lack of technical supervision. As a result, the hospital continues operating without an incinerator and medical wastes are disposed off through placenta pits which is considered a crude method. The other sundry waste is disposed off through open pit burning, and this is also not environmentally safe.
54.1.6 Land Encroachment The Hospital fenced off part of its land leaving a reasonable portion unfenced. However, the encroachers have continued to have unlimited access and use of the remaining unfenced chunk of land by either constructing permanent houses or tilling on it. Although the boundaries were opened these squatters have demanded compensation for illegal structures and crops. The lack of a fence exposes the hospital to the risks of theft. It was also noted that the much of the hospital infrastructure and access roads are in a sorry state. The hospital management explained that they do not have funds to cater for this and appeared to have no other course of action.
Although the hospital is self-accounting under its own vote, the capital development funds are still managed under the Ministry of Health. The Ministry, however, seems not to be considering the hospital’s infrastructure as a priority as no funds are released for the purpose.
54.2 Staff Establishment Review of the Hospital’s establishment list shows that the hospital is staffed to the level of 78% with 252 staff out of the recommended staff of 322. 353 There are staffing gaps of 112 representing 22%. The following is the summary table indicating the staffing position at the time of audit.
Post Recommended In post Vacant Establishment Doctors/Consultants 38 26 15 Clinical Officers 12 9 3 Anaesthetic Officers 5 4 1 Orthopaedics 8 7 1 Occupational & 43 1 Physiotherapy Radiography Staff 4 2 2 Laboratory Staff 11 9 2 Ophthalmic Staff 5 3 2 Dental Staff 6 9 1 Pharmacy 7 3 4 Psychiatric Clinical 7 5 2 Other Professional 3 2 1 Nursing 113 122 18 Theatre Assistants 5 2 3 Finance & Admin 25 12 17 Maintenance 3 2 1 Support Staff 66 32 36
There is inadequate staffing in key areas like Doctors/Consultants, Nursing and Finance and Admin, which are crucial for running a referral hospital. In Finance and Administration, the key operational areas greatly affected are internal audit, store-keeping and procurement.
In my discussions with the Accounting Officer, he explained that submission had been made to the Ministry of Public Service and Health Service Commission for the positions to be filled. He further explained that even if the posts were filled, the approved structure is no longer adequate to address the current needs of the hospital.
54.3 Revenue Collection
During the year under review, Shs.27,257,750 was banked as non tax revenue collected during the year. However, records presented for audit 354 showed that only Shs.22,620,450 was collected resulting into an un- reconciled difference of Shs.4,637,300.
In addition, banking of the collections was not regular contrary to revenue collection procedures that require all revenue collected be banked at the earliest possible moment. The irregular bankings may have been due to utilisation at source of some of the collections on emergencies without authority.
55.0 FORT PORTAL HOSPITAL
55.1 Undeclared Collections from the Eye Clinic
The Hospital operates an eye clinic that was set up with the help of donors. The operations of this clinic are governed by a Memorandum of Understanding which required the clinic to be operated as a separate unit. Revenue is generated from the sale of Intro-ocular lenses and eye examination fee for purposes of issuance of driving permits, school examinations, and sale of spectacles whose prices differ depending on quality.
However, there are no proper controls in place to safeguard collections. The following matters were noted in relation to this source of revenue:-
• The collections are not captured in the Hospitals non tax revenue records. • The collections were made using local cash sale receipts which were neither headed nor serialized. • The collections were reportedly being kept in a safe or banked on an account in Post Bank not known to Hospital management. • No proper books of accounts are kept for the funds generated.
355 In view of the above irregularities, I have not been able to perform an audit on this source of Revenue.
I have advised the Accounting Officer to liaise with the Accountant General for guidance on the management of revenue from the eye clinic in particular. Use of general receipts should be emphasised and collection should be in accordance with Non –Tax-Revenue Guidelines.
55.2 Payroll
55.2.1 Changes without use of pay change reports
Scrutiny of various payroll bank advice report schedules revealed that several changes were being made without use of pay change reports. Names were manually added or removed from the payment schedules to the banks whenever staff changed banked accounts.
It was also noted deductions in respect of loan recoveries were being made in disregard of Circular Standing Instruction No. I of 2003 guideline 5 which requires financial institutions giving loans to apply to Ministry of Public Service for payroll deduction codes. It was observed that deductions were locally made and cheques made to the loaning institutions instead of using deduction schedules prepared by Uganda Computer Services.
Effecting any changes on the payroll without use of pay change reports is irregular and undermines best practice.
55.3 Unauthorized Virements/Re-Allocations
Contrary to regulation No.39(3) of the Public Finance and Accountability Regulations, 2003 which subjects all Virements within a vote to prior authority from the secretary to treasury, a number of Virements/re- allocations were made across various items within the vote without authority from Treasury. Even the critical drugs item was not spared when
356 actually the item should be protected from such diversions. The Accounting Officer explained that management was forced to vire due to pressure from the workers’ union who had threatened to lay down their tools over the hospital’s non payment of kilometrage allowance. I have advised him to regularise the expenditure.
55.4 Expired and Expiring Drugs
Expired and expiring drugs have remained a common occurrence in the hospital stores. Expired drugs not only pose a danger to the stores personnel but are also costly to keep, and occupy space that would be utilized for other purposes.
The Accounting Officer attributed the problem to the Ministry of Health through National Medical Stores “push” system whereby drugs and sundries are simply pushed to the user Hospitals through donations without due regard to their consumption pertains and habits. It is these donations that lead to expiry. The Ministry of Health should set up a policy regarding donation of drugs and other sundries to avoid Referral Hospitals being turned into dumping grounds for such expired items.
55.4.1Stores manpower
The whole regional referral hospital store is being manned by one staff, a Senior Supplies Officer, who has to shuttle between the two hospital stores for Drugs and Sundries which are in separate distant premises.
Insufficient stores man power increases risk of loss and breeds inefficiency.
The Accounting Officer explained that although the vacancies were declared to the Ministry and interviews for stores cadre held in October, 2007 by the Public Service Commission, they were still waiting for postings to the Hospital.
357 55.5 Non- Functional X-Ray
A visit to the Radiology department established that the regional referral hospital did not have a functional X-ray. It was reported that the hospital had an old machine which had become obsolete and had since been written off. The Ministry of Health reportedly brought in another old machine to fill the gap as the hospital waits for a new machine but at the time of visit, the new machine had not been delivered and even the old one meant to act as a stop gap was not yet fully installed to function due to lack of a radiation protection part.
Lack of such an essential equipment or use of an old equipment in a Regional Referral Hospital puts patients who need X-ray examination at greater risk.
The Hospital Accounting Officer attributed the lack of an X-ray to lack of capital development budget and explained that although he has submitted to the Ministry of Health requests for capital development funds, no response had been received.
55.6 Staff Accommodation
It was noted that a number of staff were accommodated in Institutional houses. However, the utilities to these houses like power and water were not separated from the hospital meters. Therefore, included in the utility bills for the hospital are bills for the staff housed by the Hospital. The implication is that these staff benefits are irregularly revised upwards when their utility bills are paid by the Hospital.
I advised management to have these houses de-linked from the Hospital mains which supply water and electricity and install separate meters for utilities to these institutional houses.
358 56.0 KABALE HOSPITAL
56.1 Procurement Procedures/Practices:
56.1.1 Drugs and other Hospital Sundries not Taken on Charge: I noted cases where requisitions were initiated by either the Pharmacist or In-charges of wards and approved by the Procurement Officer. Such items were neither received in store nor taken on charge by the Supplies Officer (Store-keeper). Instead the Officer requisitioning acknowledges receipt of items.
This practice weakens the stores control procedures as it makes it difficult to track all the supplies made.
The Accounting Officer regretted the anomaly and explained that it was a result of emergencies arising when the supplies officer was not at the station. He directly attributed it to staff shortage in the stores department.
There is need to urgently recruit and deploy qualified stores staff to the hospital to help streamline record keeping in the stores.
56 1.2 Direct Issues to users (Doubtful deliveries): Audit of the drugs stores revealed that drugs were being ordered and delivered directly to patients (users) without going through the stores recording system. There is no mechanism for independent verification for such deliveries and issues which renders them doubtful.
The Accounting Officer is advised to ensure that all deliveries to hospital are recorded and issued through stores.
359 56.2 Stores: 56.2.1 Expired and near expiry drugs: Expired and near expiring drugs have remained a common occurrence in the hospital stores. Expired drugs not only pose a danger to the stores personnel but are also costly to keep, and occupy space that would be utilized for other purposes.
At the time of audit, the hospital had just received drugs (Aspirin and Chloroquine tablets) that had not been ordered from various agencies yet these drugs had short shelf life and were slow moving.
The Accounting Officer explained that expired drugs have been separated from expired ones to avoid mix-up. He also noted that many times it is beyond the Hospital’s control i.e. donations which come in large quantities but with short shelve lives
I advised Management to strengthen the procurement planning system such that only drugs with acceptable shelf life are purchased/received (in case of donations), to avoid dumping expiring drugs in the hospital.
56.2.2 Stores Manpower:
The hospital store is being manned by only one Senior Supplies Officer – assisted by a locally hired staff.
The Accounting officer explained that despite his constant requests to the Health and Public Service Commissions for more staff, no recruitment has been done.
56.3 Fuel Utilisation: There are no adequate records over fuel utilization. Whereas non-use of fuel advantage cards is agreeable considering the location of Kabale hospital, it was observed that controls such as maximum deposits to the 360 fuel station, allocations to the various department vehicles and proper issue of fuel orders were non existent.
For instance, a sample of payment vouchers for Shs.15,471,780 revealed that Shs.5,746,100 worth of fuel was consumed without fuel orders. It was further noted that fuel is consumed on credit and payments made later in disregard of the commitment control system.
The resultant effect has been unsettled bills (payables) worth Shs.5,826,400 at the end of the financial year under review.
The Accounting Officer explained that it was not due to weak controls but a result of external occurrences i.e. exorbitant fuel prices, shortage of diesel, power cuts and high maintenance of Hospital vehicles and the Generator.
I have advised management to institute strong controls over fuel utilisation and adopt the advantage card system.
56.4 Hospital Land: The land registered as Plot No.8-32 Johnstone Street, measuring approximately 8.59 hectares was leased to Kabale Regional Hospital by Kabale District Land Board in 2002 for 49 years. However, inspection of this land revealed that there are four plots and other developments whose true ownership and legal status are not known and yet they fall well within the boundaries of hospital land.
Some of the Plots appear to be institutional houses purportedly sold out to the then sitting tenants during the sale of government pool houses. The issue as to whether they were actually pool houses or (Hospital) institutional houses, has remained unresolved to date.
361 It was further observed that Kabale Institute of Health Sciences which is a private institution was illegally developed on the Hospital land.
The Accounting Officer, in his response explained that there is controversy surrounding Government houses/land which were purportedly bought by the then sitting tenants. He further explained that he had written to the occupants to produce evidence of legal ownership but has only received a response from one occupant who has vacated and returned the house to the Hospital.
57.0 HOIMA HOSPITAL
57.1 Payment in respect of Outstanding Bills to National Medical Stores
The Hospital paid National Medical Stores Shs.6,843,013 in respect of outstanding bills. However review of the statement that was used as basis for payment revealed that Shs.12,546,545 was made on the statement as “reconciliation correction of double entry” thus increasing the indebtedness of the hospital to National Medical Stores by this amount. Later the statement was again debited with the same amount as “reversal of wrong entry in the bank”. The two debit entries had the effect of increasing the amount owed by the Hospital by a total of Shs.25,093,090. However no details were provided to explain the adjustments. I was not provided with sufficient evidence to show that indeed the hospital owed National Medical Stores.
Further investigations should be carried out to establish the reasons for the adjustments and the indebtedness of the hospital to National Medical Stores at the time.
362 57.2 Staff Establishment
Hoima hospital was upgraded to serve as a Regional Referral Hospital for the districts of Hoima, Masindi, Kibale, Kiboga and Bulisa. As a result, the hospital’s staffing levels had to increase and the approved structure now stands at 361 posts. However, only 161 (44.5%) posts are currently filled leaving 200 (55.5%) posts vacant. Most affected are key technical areas such as the following:-
Post Approved Filled Vacant Senior consultants 4 2 2 Consultants 10 2 8 Medical: Special Grade 10 3 7 Medical officers 8 4 8 Nursing 106 99 7 Para-medicals 70 25 45 Administration 28 8 20
Understaffing in such key areas that are essential for effective service delivery undermines the reasons for which the hospital was upgraded to the level of a Regional Referral Hospital, bringing services nearer to the people. Internal Audit and Personnel functions are not staffed at all.
The Accounting Officer explained that he had declared the vacant posts to the Ministry of Health and Health Service Commission and plans were underway to fill the vacant posts. However he indicated that it is difficult to retain newly recruited staff due to lack of accommodation.
57.3 Vehicles
The hospital has only one operational vehicle that was procured way back in 1994. The other three vehicles are over ten years old and can hardly
363 operate as they frequently break down and are overdue for replacement. It is becoming uneconomical to maintain them.
There is need to have the vehicles replaced to enable the hospital operate effectively. A capital development budget should be considered for the purpose.
57.4 Non-Tax Revenue
The hospital collects non tax revenue from sale of tender documents, rent of canteen and medical fees from the private wing. During the financial year, a total of shs.4,115,500 was collected by the hospital. However occupancy of the private wing for the entire financial year was 35 patients for all the ten side rooms and generated less than two million shillings. This shows that the rooms may not probably be occupied most of the time during the year. The Accounting Officer stated that the rooms are not well furnished and have poor facilities and do not attract patients apart from a few who want privacy. I advised him either to review the policy to have the rooms available for other patients who are crammed in the few general wards available or to endeavour to upgrade the private wing to improve on the catchment area.
57.5 Stores
(a) Recording
Review of the stock cards revealed that they are not immediately updated every after a transaction. For example as of 25th July 2006, when stores were visited, all transactions for July 2006 had not been recorded on the stock cards. This made it difficult to verify the balances of stock at hand.
The Accounting Officer explained that this has been a long standing challenge to the hospital management despite rigorous supervision. He
364 attributed this to shortage of stores staff whereby the hospital has only one Stores Assistant manning all the hospital stores.
As reported in my last report to Parliament there is acute shortage of stores cadres in Government departments. There is an urgent need to recruit and deploy store keepers in all government departments’ stores for proper management of stores.
57.6 Hospital Land The hospital does not have a land title for the land it occupies. It was also observed that not all the land it occupies is fenced hence exposing the land to the risk of possible encroachment.
The Accounting Officer explained that the process of obtaining a land title had progressed following the surveying of the land. He attributed the failure to fence off the whole hospital to lack of a capital development budget.
57.7 Disposal of Medical Waste The hospital does not have an incinerator. Disposal of medical waste is by placenta pit which is considered to be a crude method of waste disposal. Disposal of other medical waste (used sundries) is by burning in open pits which is also considered not to be environmentally safe.
The Accounting Officer attributed the problem to lack of funds. He explained that the hospital needs Shs.15 million to put up an incinerator based on the model approved by the Ministry and that so far Shs.1 million has been raised from well wishers (TATA (U) Ltd).
The hospital should be considered for an adequate capital budget appropriation to address the problem.
365 58.0 SOROTI HOSPITAL
58.1 Staffing
The Hospital was found to be greatly understaffed. Inadequate staffing in key positions impacts on the efficient service delivery.
I advised the Accounting Officer to liaise with the parent Ministry to ensure that the staffing gaps within the approved structure are addressed.
The Accounting officer explained that he had made a submission of the vacant positions to the Ministry of Health for onward submission to the Health Service Commission and awaits its action. I urged him to make a follow up of his submission.
58.2 Lack of Capital development funds. The Hospital does not have a capital development budget to enable it operate smoothly. Consequently important facilities required like lifesaver equipment are lacking, the ambulance is too old and expensive to maintain. There is need for the hospital to have capital development funds in order to improve service delivery.
58.3 Hospital Infrastructure The hospital infrastructure looks dilapidated. Some renovations were done in 1999 and 2000 but covered only a few facilities. It was also noted that the sewerage system, which was meant to serve a few people, cannot serve the current capacity of the hospital any longer.
Measures should be put in place to have the hospital infrastructure rehabilitated so that it depicts the status of a referral hospital.
366 58.4 Staff Accommodation The hospital does not have adequate accommodation for its staff. The few housing facilities that exist are not in a habitable condition due to the sorry state they are in. This has created an accommodation crisis for staff as it is not possible for key medical staff to be near the hospital at all times. Without decent accommodation it is also very difficult to attract key medical personnel to work in upcountry referral hospitals.
There is need to have the problem of staff accommodation for referral hospitals addressed in order to improve service delivery.
58.5 Expired drugs Expired drugs have piled up in the stores because the hospital does not have adequate funds and an incinerator to destroy them. It was further noted that big quantities of drugs especially ARVs from NMS and donors are normally pushed to the Hospitals when they are about to expire.
There is need for the Hospital to put in place a mechanism to scrutinise all drugs received especially the expiry dates before accepting them in their stores. All those that are not required or about to expire should be rejected.
59.0 MBARARA HOSPITAL
59.1 Staffing gaps
Mbarara regional referral hospital does not have an approved staff structure. Scrutiny of the interim staff structure currently in use revealed staffing gaps as follows;
S.no Category of staff Required Actual no Staffing gap 367 no 1. Doctors and specialists 40 16 24 2. Dental staff 8 2 6 3. Theatre staff 9 3 6
Staff shortages have the effect of constraining the quality of health care provided by the referral hospital. The existing staff are exposed to the risk of stress due to overworking.
The Accounting Officer explained that the interim structure was presented to the Ministry of Health and is now before cabinet for approval after which staffing gaps shall be filled.
There is need for comprehensive strategies to be initiated to address staffing gaps at the hospital in consultation with other stakeholders.
59.2 Lack of Capital Development Budget
During the year under review the hospital operated only on recurrent budget. Without development budget, it can not acquire new equipment to meet growing needs.
It cannot also carry out the required maintenance of the hospital infrastructure. Lack of capital development budget has led to the following:-
• Non-functional x-ray machine
Inspection of the hospital wards revealed that the main X-ray machine had been non-functional since November 2006 due to faulty parts. A Pro-forma invoice on file indicated that repair costs would be US $ 30,500 which amount of money had however not been budgeted for. As a result Patients who can afford are referred to private clinics while those who can not are exposed to fate. Without equipment the quality
368 of medical students produced is also compromised. The hospital being both a teaching and referral hospital requires modern working equipment to enable it operate effectively.
In response the accounting officer explained that one mobile X-ray machine has now been repaired and the Ministry of Health promised to procure a new mobile x-ray for the hospital.
• Overcrowding of the Wards
The hospital wards house 350 beds instead of the recommended number of 250. As a result some patients are accommodated in the corridors. Congestion in the hospital has the effect of constraining mobility by both patients and medical personnel. The possibility of cross-infection can not be ruled out either. The drug stores were found to be inadequate and as a result a former kitchen was converted into a drug store. Storage of drugs in non-designated premises may affect their effectiveness.
In response the accounting officer stated that the hospital is scheduled to obtain new structures under ADB loan (SHSSP II) and these will ease congestion in the wards.
The hospital should continue liaising with Ministry of Finance, Planning and Economic Development and that of Health together with other stakeholders to obtain a capital budget for its needs.
• Disposal of Medical Waste
Medical waste disposal is by way of a pit which is a primitive method of waste disposal. The incinerator constructed by the Ministry of Health is not in use as it developed cracks shortly after its handover. Lack of
369 appropriate methods of waste disposal exposes the staff and people in the neighbourhood to the risk of environmental contamination.
59.3 Absence of Hospital board
Article 1 subsection 1.3 of the memorandum of understanding between the hospital and ministry of Health provides for establishment of a management board for the purpose of monitoring the general administration of the hospital. However during the year under review, the hospital lacked an approved management board. As a consequence stakeholders in the form of a hospital management board did not play any role in monitoring general administration of the hospital.
The Accounting Officer explained that names of proposed members had been forwarded to the Minister of Health for approval and a response is awaited.
Management should follow up the matter and ensure that approval of the board is done to enhance monitoring of the general administration of the hospital.
60.0 LONDON MISSION
60.1 Unauthorised Expenditure
The mission incurred unauthorised excess expenditure of Shs.137,471,904 without authority as shown below:-
Item Budget Actual Variance Employee Costs 1,293,111,000 1,315,777,177 22,666,177 General 20,000,000 80,610,792 60,610,792 expenses Communication 10,000,000 54,407,095 44,407,095 Travel & 40,000,000 78,675,549 38,675,549 Transport
370 Maintenance 9,000,000 176,165,541 167,165,541 Capital NIL 803,946,750 803,946,750 Development Total 1,372,111,000 2,509,582,904 1,137,471,904
The Accounting Officer in his written submission explained that the mission received authority for capital development and maintenance to offset these expenses from the collection account.
However, although authority to spend on capital development was seen, there was no evidence of approved supplementary budget and allocation warrants for the excess expenditure.
The Accounting Officer is advised to have the expenditure regularised in accordance with the law.
60.2 Doubtful Payments
A total of Shs.591,690 (£ 348,053) was incurred on the acquisition of various goods and services required for the smooth running of the mission. The following observations were made:
Renovation of Official Residence
A total of Shs.803, 940,750 (£ 231,750) was paid to a local firm for the renovation of the official residence. However, the payment was supported by a quotation showing only details of work to be done without the unit prices. Payments made also lacked certified interim certificates of work done, and were paid directly from visa account instead of transferring the funds to the operation account. In the process the expenditure was not captured in the abstracts. There was also no budgetary provision for the expenditure and a bigger portion of the work was still progress by the time of the audit inspection
371 General Repairs and Maintenance
The Mission spent Shs.99,560,300 (£28,700 ) in payments to a firm for cleaning the Chancery and for other general repairs and maintenance. However, there was no evidence that Procurement procedures like open tendering, evaluation and contracts committee approval were followed before contracting the firm. Similarly there was also no contract attached to support the payment and giving details of the repairs and maintenance work to be carried out.
I advised the Accounting Officer to provide the supporting documents and to ensure that procurement regulations are complied with in future.
Rent
An amount of £87,603.28 was paid out to various landlords and/or housing agencies for the various officers’ accommodation. I was not provided with the tenancy agreements to confirm that the payments made were genuine. It was further noted that the landlords did not acknowledge the amounts paid to them.
I advised Management to provide tenancy agreements and acknowledgements for the funds paid out.
60.3 NTR Collections
According to the accounts the mission realised a total of Shs.833,085,466 from NTR. The following observations were made: A sum of Shs.190,973,289 alleged to have been transferred to the consolidated fund was not supported with remittance advice slips and acknowledgement receipts from treasury. Similarly the amount was not recorded in the statement of Arrears of Revenues resulting in the understatement or revenues collected.
372 It was further noted that although the mission collects rent from the hire of Chancery buildings however, there were no returns made for this source. It is not clear how much was collected, banked and remitted to the UCF from that source.
I advised the Accounting Officer to amend the accounts and also to provide the relevant documents for further verification.
60.4 Internal Controls
Generally the internal controls were not adequate as shown below:
(i) Most payments were not initiated by requisitions from users or demand notes/invoices from suppliers. It was therefore difficult to authenticate such payments.
(ii) Monthly releases from Treasury were not receipted.
(iii) There were no records or any other correspondences to confirm whether the Mission handled all procurements and disposals at the Mission through the existing procurement laws.
(iii) Final Accounts were submitted via e-mail and as such the Accounting Officer did not sign them. I advised the Accounting officer to submit a signed copy of the accounts.
(iv) Unauthorised Advance An advance of Shs.3,469,000 (£ 1,000) was paid to an individual on his way to Geneva. There was no explanation or details for the advance and accountability provided for audit. Furthermore, the officer is not an employee of the Mission.
The Accounting Officer explained that he was in consultation with his counter part at Uganda’s mission in Geneva where the officer was
373 posted to have the funds recovered from the officer and refunded to the mission. I await the outcome of the consultations.
(vi) Personal Shares
Contrary to standing orders three (3) officers stayed in hotels on transfer to the Mission on arrival but personal share of the hotel bills (25%x£ 3555=888.75) amounting to Shs.3,083,074 was not recovered.
It was further noted that the mission paid Shs.121,415 (£ 35) for the accommodation of an officer who never turned up to the Hotel after reservations had been made. This expenditure is considered wasteful.
The Accounting Officer explained that the payments made were strictly for accommodation and the officers paid for the meals. Regarding the officer, the mission was requested by the Ministry of Foreign Affairs to assist him while in transit but when the mission booked for him accommodation he never turned up at the hotel.
I advised the Accounting Officer to provide proof that the payment made was strictly for accommodation and that the officers paid for their meals. For hotel reservations made and the officer who never turned up he should liaise with his counterpart at our Geneva mission to have the funds recovered from the officer.
(vii) Climatic Clothing Allowance
Whereas Standing Orders provide that climatic clothing allowance be paid to Foreign Service Officers and home staff posted to Missions. It was noted that home based officers are in addition paid warm clothing allowance which is for civil servants (other than Foreign Service Officers) on training or duty outside the country. 374
The Accounting Officer in his written reply explained that his understanding was that warm clothing is paid to all civil servants including Foreign Service officers as long as they are travelling to temperate and cold climates.
I advised the Accounting Officer to liaise with the relevant Ministry for an interpretation of the regulations otherwise the amount is considered to be a double payment.
(viii) Wasteful Expenditure
An amount of Shs.1,734,497 (£ 500) being part payment of £ 1,000 was made on un-numbered invoice dated 8/10/05 from Ben Television on Uganda image-boosting campaign. There was no satisfactory reason given for image boosting and justification for the expenditure.
The Accounting officer explained that the payment was to cover a video presentation regarding the visit of H.E The president and was meant to counter some negative publicity about the Government of Uganda.
I advised the Accounting Officer that normally such expenditures covering the visits of H.E the President are met by State House and in the absence of satisfactory supporting documents the nature of the expenditure appears doubtful.
I urged the Accounting officer to improve on the control environment and also ensure strict adherence to Government regulations.
375 60.5 Board of Survey
Contrary to regulations, there was no board of survey carried out. Therefore, a total of Shs.803,940,750 classified as non-residential buildings appearing in the accounts (in the statement of stores and assets) were not properly supported. I could not certify its composition and authenticity.
I advised Management to constitute an annual board of survey team to verify cash and the inventory balances.
60.6 Pension Liabilities Standing Orders do not allow local staff to be recruited on pensionable and gratuitable terms. They can however be paid benefits according to the laws of the host country. There was no evidence provided to show that British laws require support staff to be employed on gratuity basis. There is therefore no proper basis for the accruals of pension liabilities in the accounts amounting to Shs.647,306,154 accrued.
The Accounting Officer explained that there was a provision for the Employer/employee contribution pension scheme in the British system and the mission’s payment of gratuity was “in lieu of contribution” to the scheme and if the mission was to review the policy it would be a breach of the contracts signed with the staff.
I advised the Accounting Officer to adduce evidence that the British laws
actually provide for such payments.
60.7 Statement of Financial Performance
Unexplained Discrepancies Between Approved Estimates And Estimates In The Statements
Whereas the initial budget estimates indicate that Shs.1,591,104,000 was budgeted for and revised to Shs.1,944,504,280 as per the approved
376 estimates, it was noted that, actual transfers received from treasury were recorded as Shs.2,062,804,000. The source of the difference of Shs.118,299,720 was not explained. Further more Shs.3,166,097,000 is indicated in the budget column of the statement instead of the revised amount of Shs.1,944,504,280.
I advised the Accounting Officer to explain the discrepancies noted above and also have the figures harmonised.
60.8 Mission Properties
(a) Chancery
Apart from the 1st and 2nd Floors, which were renovated by the former tenant, the rest of the Floors need renovation. All windows need repair, the ceiling of 4th Floor leaks from the window of the 5th Floor, the toilet on the 3rd Floor require repair. Glasses on the western side of the 1st and 2nd Floor (which was not renovated by tenant) have broken window glasses. The carpets on the 4th Floor are in a sorry torn state. The basement is in pretty bad shape. Water drips down through the walls.
(b) Furniture
Most furniture including the ones in the High Commissioners office need to be replaced.
(c) Photocopiers
The photocopiers for which the Mission paid highly are broken down.
In his written submission the Accounting Officer explained that due to inadequate funding including lack of capital development funds the mission is not in position to carry out the required repairs and maintenance of its
377 properties. He however, noted that the mission had been authorised to use NTR for the renovation of the official residence and work was in progress.
I advised him to continue lobbying the relevant Government agencies for more funding and also to ensure that the mission’s requirements are captured in the Ministry of foreign affairs policy statement to parliament.
60.9 Interest Bearing Liabilities (Borrowings)
Included in the statement are borrowings (interest bearing liabilities) of Shs.6,873,095 whose details were not properly supported. Further more, the authority for borrowing has not been provided for audit.
I advised the Accounting officer to provide details of the borrowing.
61.0 NEW YORK MISSION
61.1 Unauthorised Expednditure The mission incurred unauthorised excess expenditure of Shs.1,944,297,465 without authority as shown below:
Actual Budget Excess Expenditure Expenditure
Employee Costs 1,808,779,829 1,288,107,000 520,672,829
Goods and Services 2,123,635,610 732,000,000 1,371,409,746
Consumption of Plant, 11,378,194 0 11,378,194 Property and Equipment
Other Expenses 2,637,053 0 2,637,053
Domestic Arrears Paid 16,994,043 0 16,994,043
Advance Paid 21,205,600
Total 1,944,297,465 378
Excess expenditure indicates breakdown of controls over budgetary expenditure. During discussions management attributed the irregularity to under funding of the Mission, which forces them to borrow from Non-Tax Revenue to finance various critical like:-
• Expenditure on Mission properties i.e. Uganda House and the official residence and other rented properties which are not always budgeted for despite their priority and importance.
• Costs of relocation of Embassy staff which are also not budgeted for. Pressure is put to the Mission by the Ministry of Foreign Affairs to finance the cost of relocation of officers yet no budget is provided for the purpose. In fact, the Mission still had unpaid bills for former officers who were relocated to other Missions.
I recommend that all mission operations including expenditure on the Mission properties should be budgeted for and approved by Parliament as required by the law. The relocation of officers should be properly planned and an adequate budget provided for the purpose. The policy on who to finance this relocation should be made very clear to all Missions. Government should also make a comprehensive review of the Mission operations with a view of ensuring that the Mission is facilitated adequately to pursue its objectives.
61.2 Payables Payables in the accounts were recorded as Shs.1,267,084,856 . However, the amount is not properly stated, as it does not include the arrears owed to the New York City Department of Finance of Shs.2,606,378,250 (US$1,489,359) as explained below:
379 (a) Arrears to New York Department of Finance
By 30th June 2007 the Mission owed the New York City Authorities a total of US$1,489,359.54 in ground rent for Uganda House Property. This amount comprises of Council property tax of US$1,423,313.54 and interest of US$66,046.
Delayed payment has led to accumulation of interest. It was also noted that the Mission does not regularly reconcile the assessments made by the City Authorities with their records to confirm accuracy of amounts outstanding. There is a risk of the Mission being improperly assessed and incurring unnecessary expenditure. I advised the Accounting officer that the financial statements should be adjusted to reflect the correct position of arrears outstanding as at 30th June 2007 and any adjustments should be notified to the Accountant General. The Mission should also regularly reconcile its arrears records with the City Authorities to mitigate the risk of incorrect assessments and arrangements should be made to have the arrears cleared to avoid accumulation of interest and possible diplomatic embarrassment to the Mission and Government.
(b) Arrears Owed to Ministry of Foreign Affairs It was further noted that Included in the arrears is Shs.69,952,533 owed by the Mission to the Ministry of Foreign Affairs. The amount relates to refunds made by the United Nations in respect of travel of the Uganda delegation to the United Nations General Assembly. It consists of two refunds relating to financial years 2005/2006 and 2006/2007 made to the Mission which were not remitted to the Ministry of Foreign Affairs. During discussions management explained that the Ministry allowed them to utilise the amount to finance the relocation of officers following their end of tour of duty.
380 I urged management to provide the relevant documentation to support the explanation.
61.3 Non-Tax Revenue (NTR) Collections
A total of Shs.1,959,058,280 (US$1,094,287.02) was realised as collections of Non-Tax Revenue during the financial year. These collections were in respect of rent (US$1,034,733.25), Visa fees (US$58,430) and other Miscellaneous Revenue (US$1,123.77).
However, examination revealed that only US$36,455 was remitted to the Consolidated Fund leaving a balance of US$1,021,376.82 not remitted contrary to regulations which require monthly remittance of all NTR to the Treasury.
Besides, there was no evidence that the US$36,455 was received by the Treasury.
It was further noted that contrary to regulations the amount not remitted was utilised at source without authority.
During discussions the Accounting Officer attributed the irregularity to unrealistic budget appropriations for the Mission, which falls far short of the Mission requirements.
I advised the Accounting Officer that NTR collections should always be remitted to the Consolidated Fund promptly and seek authority before utilising it at source.
61.4 Internal Controls Weaknesses were noted in the Internal Control System.
381 • Fuel Usage and Vehicle Movement.
The Mission owns three vehicles; one for the Head of Mission, one for the Deputy and a Utility vehicle which are fuelled by way of advancing funds to the drivers who later account to the Accountant.
However, there is no system in place to control and monitor the movement of vehicles and hence the usage of fuel. Fuel consumption for each vehicle cannot be linked to the vehicle movement. There is a risk of misuse of fuel and vehicles, which can lead to unnecessary increase in vehicle operating expenses.
I urged the Accounting officer to introduce vehicle movement logbooks and all staff including drivers be sensitised on their use and importance.
• Counterfoil Register
There was no counterfoil register being maintained to monitor the receipt and usage of all revenue stationery (visas, general receipt books and cheques).
This creates a risk of stationery getting lost or misused without being promptly detected. It is also difficult to monitor usage for purposes of re- ordering new stocks.
I advised the Accounting officer to open up a counterfoil register to monitor the utilisation of all accountable stationery.
61.5 Unrefunded Security Deposits The Mission entered into a rental agreement with a landlord, Westchester Country Board of Realtors, for the rental of a flat for a former Embassy staff. The agreement was to run from 1st July 2006 to 30th June 2008 and 382 accordingly a security deposit of US$6,600 was paid which was refundable upon vacation of the flat.
Following the officer’s end of tour of service, he vacated the flat and accordingly terminated the rental agreement on 31st August 2006. It was however noted that although the Mission gave the landlord the two months’ notice of termination as required by the Agreement, the Landlord did not refund the rental security deposit. Efforts by the Mission to have it paid have been futile.
I advised the Accounting officer to invoke the relevant provisions of the agreement to have the amount recovered.
61.6 Mission Properties (a) The Official Residence This is a five storey residential building located at 111 East 70th Street. Following years of deterioration, management had it repaired to make it habitable and attractive for rental purposes. In October 2006, after a tenant had settled in at a rental of US$30,000 per month the building was gutted by a fire that started from a neighbouring building. The tenant had to vacate the house to allow the damage to be rectified.
The building suffered not only fire from the adjacent building but also water damage during the fire rescue operation by the New York Fire Department.
At the time of inspection (October 2007) repairs were being carried out by the Mission using Non-Tax Revenue to rectify the damage and enable the tenant reoccupy it since he still showed interest in the property.
However, efforts by the Mission to pursue a claim with the insurance company have not yielded any results.
383 During discussions the Accounting Officer explained that initially the company had declined the claim but indications are that the company had reconsidered its position.
I advised management to continue following up the matter with the insurance company or seek legal redress and also consider the possibility of pursuing a claim for compensation against the owners of the house that caused the fire.
(b) Uganda House This is a storied building located in Central Manhattan. It accommodates the Chancery and also three tenants i.e. UNDP, United Nations and Embassy of the Republic of Burundi.
It is in a fairly good state due to regular maintenance although its heating and cooling system needs replacement.
I noted the following on the review of the tenancy agreements: -
(i) Embassy of the Republic of Burundi The Embassy of the Republic of Burundi occupies the 12th Floor having an area of 2,592 square feet. The initial lease agreement ran from 1st January 1998 to 31st December 2002 and provided for monthly rental of US$7,500. However, it was noted that ever since the expiry of the lease agreement in 2002, no new agreement has been entered with the Mission. The Mission drew up a draft lease in 2005, which was also not concluded. Records indicate that payment is not regular and at the date of audit inspection (October, 2007), the tenant was in arrears by six months to the tune of US$45,000. The rental does not reflect the current market rates for such location.
384 (ii) UNDP UNDP occupies 2nd, 4th, 5th, 6th and 7th Floors. Their lease expired on 31st May 2007. During this lease period (5 years), the organisation had paid rent that was well below the prevailing market rate for the area yet the cost of utilities was increasing.
On expiry of the lease, the Mission proposed a new lease agreement with an increment of rent from US$29 to US$40 per square feet, which was declined by the UNDP. UNDP subsequently indicated their intentions to terminate that lease which was accepted by the Mission.
(d) Titles for Uganda House and Official Residence The titles for the two properties could not be traced at the Mission. Management’s view is that they are with the responsible Ministries in Kampala. I advised management to follow up the matter with the responsible Ministries and have copies kept at the Mission.
(e) Civil Works The Embassy periodically carried out civil maintenance works on the two properties owned by the Mission. During the year, the maintenance work included repairs on the fire escape, painting of the interior of Uganda House, elevator roof, ceiling repairs, plumbing, cooling and heating system and remedial work on the rented property. It was however noted that there is lack of proper segregation of duties right from solicitation of firms to do the work to certification of the work done by the contractors. The Building Manager sometimes handles the whole process. For instance, he solicits for firms to do the work, requests them for their quotations, participates in the evaluation and approval of the firms to do the works in addition to supervision and certification of the works done by the contractor.
385 These duties should be properly segregated so that there are adequate checks and balances in the system. During discussions the Accounting Officer attributed this to poor staffing.
I advised the Accounting officer that duties related to civil works and maintenance should be properly segregated to enhance proper supervision, and that all civil works should be properly supervised, approved and certified by a responsible committee.
(f) Utility Van The utility van for the Mission (Ford Wind star) has become old for use by a diplomatic mission. There is need to have it replaced with a new vehicle.
I urged the Accounting officer to consider the replacement of the utility van in the mission’s budget.
61.7 Fines and Penalties The Mission incurred nugatory expenditure of Shs.2,143,750( US$1,225) on fines and penalties resulting from traffic and parking violations by Mission drivers. The cause of this is either careless driving, indiscipline on the part of the drivers, or use of poorly skilled or trained drivers.
I advised management to put in place a code of conduct to address the indiscipline and carelessness at the work place and also to regularly train staff to equip them with skills necessary to perform their functions effectively.
61.8 Local Staff The Mission employs a number of locally recruited staff. However, I was not provided with terms and conditions of service for local staff although it was indicated that they were available. Besides, the personnel files for 386 many of the local staff lacked evidence to show that their recruitment was approved by the Ministry of Foreign Affairs as required by the Standing Orders. Their schedule of duties was also not made available during the audit.
I advised management to draw up the terms and conditions of service for local staff to regulate their recruitment, remuneration and administration.
62.0 WASHINGTON MISSION
62.1 Poor Book-keeping It was noted that the Mission did not maintain expenditure ledgers to ascertain how the details of the balances shown the Accounts were analysed and accumulated into the total yearly expenditure. In addition, no proper cash book for Non Tax Revenue was kept. For instance, receipts issued for NTR collections WERE not recorded in the Cash book making reconciliations with the bank difficult.
62.2 Excess expenditure The mission spent a total of Shs.342,912,987= on goods/services consumed and property, plant and equipment in excess of the approved budget rendering the expenditure unauthorised.
62.3 Payables The payables balance of Shs.42,075,618= was not supported by the outstanding commitment list and other documentation. This limited the scope of my work.
387 62.4 Transfers received from other government units Shs.39,176,716= was reported as received from other government units. However, the mission did not provide the details which could enable me verify its source and the purpose for which the funds were received.
62.5 Unspent Salaries Examination of accounts revealed that one Embassy staff was transferred in April 2006 without a replacement but the Ministry continued to release to the Mission the salaries and allowances attached to that post. By the time of audit inspection, the remuneration had accumulated to US$56,086 which was being deposited on the Embassy’s development account.
Management, explained that the money was retained in anticipation of receiving a replacement. I informed the Accounting Officer that the money constitutes unspent salaries by which law should be remitted back to the consolidated fund.
62.6 Non Tax Revenue (i) Sale of temporary travel documents A total of Fr 910,000 was collected from the sale of temporary travel documents. However, only Fr 747,900 was remitted to Bank of Uganda, leaving a balance of Fr 162,100 (Approx. US $292) un- remitted (not banked). The Accounting Officer was advised to bank and transfer the balance to the consolidated funds.
(ii) Fees from sale of visa stickers During the financial year, the Embassy collected a total of US Dollars 8,740 from sale of visa stickers which were banked and subsequently remitted to Bank of Uganda. However, there was no evidence of receipt from the Accountant General to confirm that the funds reached the Consolidated Fund. 388 (iii) Sale of utility car The Embassy boarded off an old vehicle (Land-Rover 110 (CD15002R) formerly used as utility car at an amount of Fr 1,500,000 (US $2,727.2). Regulations require that such funds be receipted as NTR and remitted to the UCF. On the contrary, the funds were banked on the Embassy’s Development Fund Account. I advised the Accounting Officer to have these funds transferred to the Consolidated Fund Account.
62.7 Payment of Taxes – VAT The Embassy is exempted from paying local taxes including VAT. However, the arrangement is that the tax is paid first and a claim submitted to the tax authority for refunds by the Embassy. Although records show that several services were paid for from which VAT exemptions were applicable, management did not submit claims for VAT refunds to the Tax body. The Accounting Officer admitted the anomaly and promised to follow up the matter with the tax body.
62.8 Contract for maintenance of Embassy website The Embassy contracted an individual to install and maintain the website for the Embassy. A monthly fee of US $700 (Fr 385,000) is paid to him for its maintenance. However, this arrangement is not supported by a contract agreement spelling out the terms and conditions of maintenance. This puts the Embassy at a great risk in case the vendor is not able to maintain the website to the satisfaction of the Embassy.
Similarly, no documentation is made by the vendor to prove work done which could assist management to keep truck of any changes. I advised the Accounting Officer to draw a contract with the vendor and streamline his activities with the Embassy.
389 62.9 Tenancy Agreements A review of documents revealed that the tenancy agreement provide for a three months notice before either party could terminate the contract. The provision appears unfavourable for the Embassy and indeed it suffered a payment of Fr 1,650,000 for two extra months for a house formerly occupied by a Counsellor when his term was ended abruptly. The Accounting Officer in a preliminary discussion stated that he had taken steps to revise tenancy agreements to counter the provision for a reduction to one months notice.
I advised him to expedite the process and negotiate for terms that provide for unique circumstances where such expenditure could be avoided.
62.10 Other Assets/Inventories: The inventory at the Chancery; residence of the Ambassador and inventories in possession by other member of staff are not engraved/marked to distinguish them from privately owned property.
Besides, the inventory registers maintained by the Embassy are not updated regularly to reflect the true position of property owned at any one time by the Embassy.
The Accounting Officer was advised to have the inventory registers updated regularly. And also cause the assets to be engraved.
The stores ledger was also not properly kept. Although the ledger exists, purchases were not properly recorded to reflect quantities received, how they were issued out and the balances. Items purportedly received were haphazardly recorded, making verification of stores rather difficult.
390 62.11 Conversion of Fr to Dollars The Embassy management preferred to use the open market dealers for the conversion of currencies which purportedly offered better rates. It was however noted that the rates used in the conversion process were not disclosed to enable me ascertain the accuracy of funds in dollars on conversion and whether these funds were dealt with in accordance with the existing regulations.
62.12 Non maintenance of creditor’s ledgers The Embassy had running contracts with a number of service providers especially Landlords for Chancery and residential houses and security firms. Payment records indicated that the Embassy owed the Diocese of Kabagayi a total of US $68,000 in unpaid rent since 1999. However, no ledgers were maintained for the security service providers. Besides although the Embassy had substantially reduced this debt, the basis of payment was a statement from the service provide rather than documents maintained by the Embassy.
I advised the Accounting Officer to open up ledgers for all service providers, and ensure that they are properly maintained.
62.13 Procurement Procedures (a) Lack of Proper Documentation:- PPDA procedures require that all procurements should be by issue of LPOs. Contrary to this all procurements of goods and services were not backed up by any LPOs. Similarly, deliveries were not witnessed and supported by delivery notes and goods received notes.
(b) Lack of Contracts Committee:- The Embassy does not have a contracts committee or PDU as required by the PPDA Act and regulations. Consequently all
391 procurements of goods and services were not supported by contracts committee authority.
However, during discussion with the Accounting Officer, he explained that it was impossible for the Embassy to have the committee in place because of the staffing requirements for Contract Committee, which the mission cannot meet.
I advised him to liaise with PPDA, the Ministry of Foreign Affairs and Ministry of Finance, Planning and Economic Development to find a workable solution given the unique situation at the Embassy.
63.0 NEW DELHI MISSION
63.1 Unauthorised Expenditure
According to Statement of Appropriation Account (Based on nature of expenditure for services voted) the mission incurred expenditure of Shs.33,830,369 above the approved budget on domestic arrears. This excess expenditure lacked relevant authority.
I advised the Accounting officer to have the expenditure regularised by way of a reallocation/virement.
63.2 Non Tax Revenue Collections
A review of the accounts revealed that the mission collected a total of Shs.82, 391,175 as Non Tax Revenue of which the mission was granted authority by the Secretary to Treasury to spend at source Shs.15,966,612 (Rs 423,982) on expenses relating to the shifting of the Chancery. However, the balance of Shs.66,424,563 ( Rs 450,000 ) equivalent to US $ 9,683, lacked evidence of its remittance to the Consolidated Fund.
392
63.3 Rental Payments for Chancery Premises
It was noted that the Mission shifted its Chancery to new premises on D- 5/4 Vasant Vihar, New Dehl at a rental charge of Rs 4,200,000 ( Rs 350, 000 per month) equivalent to US$ 91,296. The details are as below:-
i) Rent for premises 600,000 (paid to Ravinder Singh) ii) Rent for Fixtures & Fittings 840,000 (paid to Harmeet Kaur) iii) Rent for Premises 600,000 (paid to Harmeet Kaur) iv) Rent for Fixtures 780,000 (paid to Harmeet Kaur) v) Rent for Premises 1,380,000 (paid to Mr. Kuldip Singh)
However, the following are my observations:-
(a) Payment to three different individuals
The payment for rent of the Premises was made to three (3) different individuals for the same property contrary to the normal practice of making payment to an individual owning the property or to management of trustees to the estate.
The Accounting officer explained that the payments to three different individuals for the same property were caused by the cultural norms in India whereby the rented property was inherited by two brothers and one sister who failed to agree on one person receiving the money and that in the lease agreement it was agreed that payments would be made individually to the three persons. However, I did not obtain the tenancy agreement for verification.
(b) High Rental Charges
The original premises at B-3/26 Vasant Vihar were being rented from Mr.Rustagi at Rs150,000 ( Rent for premises of Rs100,000 and Fixtures at Rs 50,000) per month. However, rent for the new Premises the Mission shifted to was at Rs.350,000 which cost is twice as much as the original 393 price. I did not review the valuation report for the new premises to remove doubt of rent being unjustifiably hiked given the fact that the two Premises were located in the same locality.
The Accounting officer explained that the former landlord refused to renew the tenancy agreement and thereafter rented the premises to the High commission of Trinidad & Tobago at a rate of Rs 650,000. She further noted that the cost of living in New Delhi had increased drastically with property rentals tripling. (c) Hire of fixtures and fittings
The fixtures and fittings were hired at Rs 1,620,000. There was however no list attached to verify the quantity, quality and price values attached to these items. I was therefore, unable to reliably assess and evaluate the correctness of this charge. . 63.4 Unspent Balances
Examination of Accounts revealed there were balances on various mission accounts from the previous year totalling Shs.70,396,920. However, I was not provided with evidence that the balances were transferred back to the Consolidated Fund as required by the law.
I advised the Accounting officer to transfer the unspent funds promptly to the consolidated fund and to amend the accounts accordingly.
63.5 Contingent Liabilities
Supporting documents for the contingent liabilities of Shs.4,9440,390 shown in the statement of contingent liabilities were not provided for audit. I could not confirm its justification to stand in the mission accounts.
394 64.0 CAIRO MISSION
64.1 Cash and cash equivalents There were no certificates of bank balances and reconciliation statements presented to support the cash and cash equivalents of Shs.92,490,512 shown in the accounts. I advised the Accounting officer to provide the documents for verification.
64.2 Unauthorised expenditure The mission incurred unauthorised expenditure of Shs.49,622,040 (Le 165.406.80) on consumption of property, plant and equipment without authority. I advised the Accounting officer to provide a re-allocation warrant for audit.
64.3 Circumvention of Public Procurement Regulations
The mission incurred a total of Shs.109,681,221 (US$ 63,965.63 or Le 365,604.07) on the renovation of the Ambassador’s official residence at 48 EL Orouba Street. It was however, noted that the procurement was neither subjected to competitive bidding through advertisement, nor was it approved by the mission’s Contracts/ Finance Committee.
Besides, I was unable to appraise the quantity and quality of the works done because; neither Bills of Quantities (BOQ) nor Certificate of Works done was availed for inspection.
I advised the Accounting officer to always adhere to Government procurement regulations and also provide both the BOQ and certificate of works done for verification.
64.4 Internal Controls
Generally the internal controls were poor as shown below:
395 Expenditure vouchers were not stamped “Paid”, initiated, nor signed by recipients to acknowledge receipt of payments. Similarly supporting hence limiting my scope of audit.
Contrary to Treasury Accounting instructions there was no petty cash book maintained.
It was further noted that while the head of mission is mandated to provide political supervision, he has also assumed the Accounting Officer’s role by being a signatory to all mission bank accounts. This decision by the Ambassador contravened the Treasury Accounting Instructions, which give the Accounting Officer the overall responsibility of financial management at the Mission.
I advised management to improve on the control environment and also ensure that the head of mission only provides supervision rather than directly getting involved in financial management.
64.5 Statement of Appropriation Account(Based on services voted by Parliament)
The statement does not show actual expenditure incurred on each item. This makes comparison of approved estimates against actual expenditure, by item, impossible.
I advised the Accounting officer to amend the accounts and include the figures to facilitate trend analysis
64.6 Unauthorised use of NTR
Examination of accounts revealed that the mission collected NTR totalling Shs.27,819,449. The following observations were made:
NTR returns for the period March-June 2007 were not provided for audit.
396 There were no acknowledgement receipts from treasury to confirm that the funds were actually remitted to the consolidated fund.
During inspection it was noted that Shs.5,888,016 (Le 18,993.6) was transferred from NTR collection account to a Local Expenditure account and subsequently spent without authority. Furthermore, although the statement of arrears of revenue reflects an amount of Shs.20,400 as due to the UCF, actual amounts due should have been Shs.7,989,714.
I advised the Accounting officer to provide all NTR returns for the whole period, acknowledgement receipts for the funds remitted to the Treasury, recovering all funds utilised at source without authority, and also address the variances noted above.
64.7 Staff Without Valid Contracts
Two Home Based Officers employed at the Embassy lacked valid employment contracts. One had his contract expired on 2nd August 2007 and the other on 30th September, 2007. Accordingly Shs.71,819,254 (US $.41,755.38) paid to them in form of Salary, Foreign service allowances and representative allowances up to the time of audit was irregular.
Officer When contract expired Amounts Involved Mr Migadde Lubulwa 2/8/2007 US$ 14,249.08
Mr Arthur Katsigazi 30/9/2006 US $ 27,506.30 Total US $ 41,755.38
I advised the Accounting Officer to ensure that the officers Contracts are regularized
397 64.8 Repair Of The Mission Vehicle The Mercedes Benz E 280 LL belonging to the embassy was involved in an accident with a lorry belonging to Cairo Transport Company (CTC). According to records seen, the accident was caused by the fault of the CTC driver who should in this case have been held responsible for the repairs.
Subsequently the embassy paid Shs.5,456,100 ( Le 18,187.00) towards the repair of the vehicle which should have been met by CTC if management had followed up the case with the relevant authorities.
In a related development all the embassy Vehicles were not insured. This perhaps explains the reason why management did not pursue the matter further.
I advised the Accounting officer to ensure that all the embassy vehicles are insured to avoid such losses to Government and also to recover the funds incurred on the repairs from the Transport Company.
64.9 Irregular Payment Of Children Allowances A sum of Shs.30,450,192( US $ 17,703.6 ) was paid to two officers towards their entitlements upon arrival at the new station. Included is Shs.5,325,120 ( Us $ 3,096) in respect of Children Allowance for 6 children whose age is in excess of 15 years limit permissible by the Standing Orders This expenditure was irregular and is considered recoverable.
I advised the Accounting officer to have the US $ 3,096 recovered from the concerned officers.
64.10 Overpayment Of Baggage Allowances Contrary to Standing Orders which entitle an officer to 50 Kg worth of baggage charges per family (by Air) on return from a Mission to Uganda, an officer was paid Shs.1,485,000 (Le 4,950) in respect of Airlifting 174 Kg of
398 his baggage which exceeded the 50 kgs baggage weight by 124 kgs. In the circumstances, funds paid for the excess baggage to the officer is irregular and recoverable.
I advised the Accounting officer to recover all the funds paid in excess.
64.11 Mobile phone bills Contrary to standing orders which entitle Foreign Service officers who have official telephones at their residences to two thirds of the cost of un-timed calls, a total of Shs.6,259,821( Le 20,192.97) was paid out in refunds for expenses incurred on officers personal mobile phones without deducting one third of the their contribution amounting to Shs.2,086,610( Le 6,731). Besides, the regulations only provide for “official telephones” not mobiles phones.
I advised management that the officers’ contribution should be recovered and that Mobile phones are prone to misuse and hence a limit should be set as to the monthly entitlement.
65.0 ADDIS ABABA MISSION
65.1 Penalty on delayed payments This issue was mentioned in my three previous reports for financial years 2003/2004, 2004/2005 and 2005/2006 under paragraphs 53.7, 57.11 and 57.3 respectively. During the year under review a total of Ethiopian Birr 1,089,963 (approx. US $125,796) was paid to R.H.A Housing Adm. Department in respect of rent arrears for the Chancery building for the period February 2004 to September 2006. Included in the payments was Ethiopian Birr 181,652 (US $20,965) in respect of penalty charges incurred due to late payment. This expenditure is considered wasteful, as the
399 Mission would have avoided it had it paid on time as per the tenancy agreement.
As stated in my previous reports, I recommend that the Accounting Officer liaises with the relevant authorities to ensure that sufficient funds are made available to enable prompt rent payments and elimination of this wastage.
65.2 Circumvention of Public Procurement Regulations The Mission received capital development funds some of which were applied on procurement of goods and services equivalent to Shs.47,908,943. However, contrary to procurement regulations there were no contract committee in place and procurement plans. Consequently the Mission opted for “off-the-street” purchases and securing street vendors’ receipts to support the payments.
In a related development an old Mercedes Benz and a utility car (Nissan) were disposed of at Birr 31150 and 30,000 respectively. However, there was no evidence that the disposal regulations were complied with.
The Accounting Officer explained that procurement and disposal regulations are difficult to implement in the Mission and that the matter is being handled by the Ministry of Foreign Affairs and the PPDA.
I informed the Accounting Officer that the practice is illegal and should be discouraged until the PPDA comes up with the amended regulations and guidelines.
65.3 NTR collections. Examination of NTR returns revealed that the mission collected revenue totalling Shs.87,105,005. The following observations were made:
400 (a) Cash Survey A cash survey held on NTR on 22nd October 2007 at 3.15 pm revealed a shortage of Birr17, 755.37 and US$14.
I advised the Accounting officer to make good the shortage. I further recommend that an officer be appointed as a cashier with a prescribed cash limit approved by the Accountant General.
(b) Contrary to regulations that require NTR to be collected and remitted intact to Bank of Uganda, the mission utilises the NTR at source, which is later repaid to Bank of Uganda using the remittances (RBCs).
The Accounting officer explained that due to local banking regulations, the Mission couldn’t open a separate bank account for NTR from which remittances to Bank of Uganda can be made. Therefore, collections are kept in a safe with the Accounting Officer and utilised by her. Since the Accounting Officer keeps and approves use of the NTR there is risk of temptation and probably this scenario could have caused the shortage mentioned above. As advised above, a cashier be designated and appointed in consultation with the Accountant General who will recommend the cash limits and proper procedures of managing the cash. Meanwhile, the Ministry of Finance, Planning and Economic Development be requested to approve utilisation of NTR in the Mission budget which should be deducted from the Mission RBCs.
(c) Unused Single Entry Visa Stickers of US$30 Thirteen books of the above visa stickers had not been used when the US$50 stickers replaced them. They were: -
401 Serial Number Number of Books 319701-319950 5 books 320551-320650 2 books 320901-320950 1 book 354351-354600 5 books
Meanwhile, the stock of the new US$50 stickers were used up with only eight leaves remaining. The Mission was contemplating to use the old ones of US$30 that had been discontinued by the Ministry of Internal Affairs.
I advised the Accounting Officer to requisition for the appropriate stickers and also consult the Ministry of Internal Affairs on how the old ones were to be disposed of otherwise they risk being misused.
65.4 Internal Controls Generally the internal controls were poor as shown below:
• Duplicate Copies of Returns The existing accountability arrangement requires that the original copies of the monthly accounts returns are submitted for audit while duplicate copies are retained by the Mission. It was observed that in some instances original supporting documents to the expenditure vouchers especially in respect of utilities were retained by the Mission.
I advised the Accounting Officer to seek guidance on the correct system of account returns to avoid future confusion.
402 • Over Expenditure on Allowances and Telecommunication A review of the vote book for 2007/2008 revealed over expenditure as at 24th September 2007 on Item 211103 (Allowances) of US$533.21 and Item 222001 (Telecommunication) of US$502.83.
I advised the Accounting officer to put in place a mechanism to control allowances and telecommunication by requiring officers to justify trips made and render back to office reports. In case of telecommunication registers to record authorised faxes and telephones.
• Payees’ Signature It was further observed that most expenditure vouchers do not bear signatures of receivers of cash/cheques acknowledging receipt of their payment casting doubt as to whether the money was actually received by the rightful beneficiaries.
I advised the Accounting Officer to ensure that payees sign on the vouchers as they receive their cash/cheques in compliance with Government regulations.
I urged the Accounting officer to improve on the control environment and also ensure strict adherence to Government regulations.
65.5 Board of survey The Board of Survey report on cash for the financial year 2006/2007 revealed the following: - (a) Local Account No. 01705/171270/00 Cash on hand Birr 75,223.70 Bank balance 13,531.75 88,755.45
403 Having cash on hand of Birr75,223.70 equivalent to Shs.14,717,680 at any one time is excessive cash which is risky and tempting.
I recommend that the Accountant General be contacted to prescribe a cash limit for the cashier. In any case these unspent balances should have reverted to the Uganda Consolidated Fund in accordance with the Public Finance and Accountability Act 2003.
(b) US Dollar Account No. 2702/170083/00 The unutilized bank balance on this account amounted to US$122,556.07. This amount has not been repaid to the Consolidated Fund as required by the law.
The Accounting officer explained that these amounts were balances released by the Ministry of Finance to clear domestic arrears of the Mission and that the she was contemplating seeking authority from the Ministry of Finance to reallocate the money for other needs of the Mission.
I advised the Accounting Officer that it was wrong for the Ministry of Finance to release funds over and above the domestic arrears requirements as this implies that the domestic arrears budget was not properly co-ordinated and the funds should revert to the Consolidated Fund as their authority lapsed.
65.6 Unaccounted for funds Examination of accounts revealed that a total of Shs.15,307,011 was advanced to some mission staff for various reasons. The following observations were made:
404 • Personal Advance A sum of Birr31,800 was paid to an officer as a personal advance. However, at the time of inspection (22nd October 2007), there was a balance of Birr5,545.90 (Shs.1,085,067) outstanding.
The officer promised to settle by October 2007. I urged the Accounting officer to remind the officer and have the balance settled.
• A sum of Shs.14,221,944 was incurred on travel abroad. However, I was not provided with the field reports made by the officers to confirm that they actually made the trips.
I advised Accounting officer to obtain the reports from the officers provide them for audit verification.
65.7 Personnel matters A review of personal files revealed: -
• Head of Mission According to appointment letter reference CP 64222 of 10th May 2006 the Head of Mission was appointed for duration of 36 months with effect from 2nd August 2004 implying that her contract appointment expired in July 2007. However, she had not obtained a new contract for the period effective July 2007.
I advised the Accounting Officer to remind the Head of Mission to obtain a valid contract appointment otherwise her monthly remuneration of US$3,562.27 effective August 2007 was irregular.
• Locally Recruited Staff Personal files of locally recruited staff were not up to date as some lacked application letters for appointment, evidence of qualification, 405 employee record card and photograph of identification and confirmation letters.
I advised the Accounting Officer to ensure that files are updated. • Implementation of the New Open Staff Performance Appraisal Forms There was no evidence that the new open staff performance appraisal system as required by Ministry of Public Service was in place. I urged management to implement system.
65.8 Status of the mission properties • Chancery Condition The chancery is being rented from a government agency known as the Agency for Administration of Rented Properties at a monthly rate of Birr6,781.04 since 1986. According to the available tenancy agreement dated 8th December 1986, the lesser is required to maintain the building. It appears however that it has not been maintained for a long time to the extent that it has no flowing water in the taps and toilets, the plumbing systems is old and blocked requiring fixing and its external as well as internal appearance does not appeal.
The Accounting Officer explained that the Agency has been contacted to remedy the situation but positive response has not been achieved. I urged her to follow up the matter otherwise the image of the Mission is at stake. Besides the tenancy agreement needed renewal.
• Old and Obsolete Furniture and Equipment Two stores full of old and obsolete furniture and equipment were seen. Furthermore according to the Board of Survey for the financial year 2006/2007, a Mercedes Benz model 1990 was recommended for a board off.
406 I have urged the Mission to obtain appropriate authorities from the Permanent Secretary/Secretary to the Treasury to have the items disposed and boarded off otherwise they risk further deterioration in scrap value and they are occupying store space that can be put to other use.
• Property Acquisition The Mission spends Shs.199,633,000 (US$114,076 ) annually in respect of rent of official residence, chancery and other residences. The Federal Government of Ethiopia offered Missions plots for development. Uganda was offered plot for development long ago but up to now no development has taken place despite the Mission’s effort to raise the matter with Ministry of Finance as well as Ministry of Foreign Affairs.
I urged the Mission to continue raising the matter with the two Ministries and in other relevant forums for their appropriate intervention so as to save the Mission rent obligations.
65.9 Mission Charter The Embassy of Uganda in Addis Ababa is accredited to the Federal Democratic Republic of Ethiopia, Djibouti and Yemen. It is also accredited to the African Union, Un-Economic Commission for Africa and IGAD. The Mission is charged with implementing its charter as follows: -
Ethiopia
Ensure that Uganda’s interests are fully reflected in the AU Peace Making and Peace Building initiatives.
Ensure that Uganda’s interests are fully reflected in the ongoing AU rationalisation of regional economic committees.
407 Engage in and report on the formulation of AU position on major international issues of direct interest to Uganda or which could affect Uganda’s interests abroad.
Placement of Ugandans in influential senior and policy making positions in the AU organs/subsidiary bodies of interest to Uganda.
Engage in AU initiatives aimed at addressing refugees problems in Africa especially Rwandese, Sudanese and Congolese refugees and Seek co-ordinated position with Ethiopia on matters relating to the Nile River basin.
Djibouti
Ensure that Uganda’s interests are fully reflected in the IGAD led Peace Making and Peace Building Initiatives and engage in and report on the formulation of IGAD position on major regional issues of direct interest to Uganda or which could affect Uganda’s interests within the region.
I noted that the amount of work involved in accomplishing this charter is enormous and needs to be carefully thought out and planned and yet I did not see a strategic plan in place.
I advised management that the Mission based on its charter should prepare a logical strategic plan, which spells out very well interalia, measurable and realistic outputs. This strategic plan should be costed. The resulting budget should then be used to solicit for budgetary funding. The implementation of the strategic plan should then have a mechanism of regular monitoring, evaluation and reporting.
65.10 Contributions in Arrears
It was reported by the Mission that the Uganda Government has contributions in arrears totalling to US$4,314,376.67 in respect of IGAD
408 1999-2006 (US$3,792,083) and African Union 6th September 2007 US$521,793.67.
I urged the Mission to continue informing the Ministries of Finance and Foreign Affairs for their intervention to avoid any sanctions that non- payment of contributions may attract.
66.0 BEIJING MISSION
66.1 Excess Expenditure During the year under review, the Mission was granted authority by the Permanent Secretary/Secretary to the Treasury to spend US$108,629 out of the NTR collected at source so as to meet various out standing commitments. However, the mission exceeded its approved budget by Shs.148m which required supplementary approval which the mission did not obtain.
I advised the Accounting Officer to seek for a supplementary approval for the amount over spent
66.2 Domestic Arrears No creditors’ ledger was maintained to keep track of several part payments made due to insufficient funds available for this expenditure item. This therefore made it very difficult to verify reliably the domestic arrears balances of Shs.136,281,089 as indicated in the Statement of financial position as at 30th June 2007.
Management is advised to maintain creditors’ ledgers to keep track of all rent transactions.
409 66.3 Book Keeping It was observed that the Mission still uses the old payment vouchers and all payments have continued to be authorized by the Ambassador rather than the Accounting Officer contrary to the existing regulations. Besides, the payment vouchers were not serially numbered neither were they stamped “PAID” after payment was made as required by Treasury Accounting Instructions, 2003.
Furthermore, payments from Imprest had no payment vouchers instead, the Imprest holder recorded payments in a book. In addition, the Imprest was operated without seeking the authority of the Accountant General. It was also noted that rent payments constitute a significant percentage of Mission expenditure.
Management should obtain authority to operate an Imprest from Treasury and ensure that duly authorised payment vouchers are used to pay by the Imprest holders. Paid Imprest vouchers should also be stamped “PAID” to avoid the risk of recycling them.
In his response the Accounting officer explained that he had requested for the proper vouchers from the treasury and also written to the Accountant General for authority to operate an imprest.
66.4 Inventory (a) Engravement of Mission Property and Equipment In the chancery are very old curtains and other furniture bought in the 1970’s when the Mission was first opened. These were recommended for boarding off by the Board of Survey carried out in 2000 but they have never been disposed of. The furniture also requires urgent replacement.
Few items have been replaced in the official residence such as furniture for the main sitting room, the conference room. However, there is need to 410 replace curtains as well as the floor carpet for the main sitting room, and furniture for the dinning room. This residence needs to be well furnished to the required standard as it is used for official functions.
In his response the Accounting officer explained that arrangements are being made to have the property engraved and that the embassy has submitted a capital development budget proposal for the year 2008/09 to replace the old items at the chancery as well as official residence.
(b) Condemned Vehicle The Mission has one Mercedes Benz vehicle that was condemned by the Chinese traffic authorities. This car has outlived its usefulness according to the traffic authorities and is no longer roadworthy.
The Accounting Officer should seek for authority from the Permanent Secretary/Secretary to the Treasury to have the vehicle disposed off.
67.0 OTTAWA MISSION
67.1 Unauthorized Expenditures During the period under review, expenditure amounting to Shs.257,997,702 was incurred in excess of the appropriation on expenditure item goods and services consumed. Against an the approved budget of Shs.340,066,000, the mission spent Shs.598,063,702 thus leading to an unauthorized expenditure of Shs.257,997,702.
In her explanation the Accounting Officer attributed the over expenditure to poor funding of the Mission by the Treasury which forces the Mission to utilize non-tax revenue to fund critical activities of the Mission.
411 There is need for government to make a comprehensive review of the Mission needs and budget for them accordingly. The unauthorized re- allocations should be regularized in accordance with the law.
67.2 Payables An amount of Shs.126, 460,542 was reported as payables for the year. There was however no details to support the figures. I could not therefore, confirm the balances.
Management was requested for the necessary supporting documentation
67.3 Unacknowledged remittance to the Treasury US $15,370.59 remitted to Uganda Consolidated Fund account in July 2006 has not yet been acknowledged.
67.4 Incompletely vouched expenditure US$6,000 transferred to the CND account for payment of urgent bills lacked details.
67.5 Non-Tax Revenue (NTR)
The Embassy has two NTR accounts, one in US Dollars (US$) and the second in Canadian Dollars (CND). Examination led to the following observations.
(i) Remittance to the Treasury In July 2006, the Mission remitted US$15,370.59 to Bank of Uganda as a transfer to the consolidated fund. This amount has not been acknowledged to date. It is also not clear as to which period the above amount relates.
412 (ii) Under Banking Similarly, an amount of CND 98,314 was collected and only CND 98,156 was banked. It was also noted that there was no remittance to the Consolidated Fund from this account CND 62,892 was transferred to the operations/expenditure account and subsequently spent at source. It is not clear why the Mission maintains two accounts for NTR contrary to the requirement to have all collections remitted promptly.
(iii) Incompletely vouched expenditure US$6,000 was transferred to the CND account but the details and the purpose for the transfer was not explained.
Management is requested to remit all the Non Tax revenue collected as per Treasury regulations.
68.0 TOKYO MISSION
68.1 Excess Expenditure Parliament approved a total expenditure of Shs.1,392,280,000. However, the Mission spent Shs.1,401,099,752, leading to an over expenditure of Shs.8,819,752, which lacked relevant authority. It was further, noted that expenditure totalling shs.45,780,998 was re-allocated by management without authority.
I have advised the Accounting Officer to regularize the expenditure in accordance with the law.
68.2 Unaccounted for Funds totalling JP yen 7,444,877 (US$ 62,561) advanced as office imprest had not been retired. It was further noted that the mission operated the imprest system without seeking for an imprest warrant from the Accountant General contrary to financial regulations. 413
The Accounting Officer should always apply for an annual imprest warrant from Treasury. Imprests should also be replenished only after the previous ones have been accounted for.
68.3 NTR Remittances Of JP yen 98,695,137 collected; the mission remitted JP yen 93,568,180 to the consolidated fund leaving a balance of JP yen 5,126,957 (US$ 42,725) not remitted contrary to regulations. This balance appears to have been utilized at source without authority. The amounts remitted were also not supported with receipts from Treasury.
68.4 Nugatory Expenditure It was noted that the mission continued to pay a monthly rental of 30,000 Yen (US$ 252) as parking fees for a vehicle that had been deregistered and replaced. The vehicle was deregistered in January 2006 after it had attained the threshold mileage of 100,000 KM, in line with the Japanese traffic regulations. Although, the assessment by four (4) independent firms had put the van at a realizable value of JP Yen 130,000 the mission had not made any effort to get the vehicle disposed off.
I advised the accounting officer to dispose off the van so as to save the government the unnecessary expenditure and further loss in value of the asset.
68.5 Poor Bookkeeping (i) Payment vouchers not marked “PAID” It was observed that all payment vouchers and their supporting documents were not stamped “Paid” contrary to para.178 of the Treasury Accounting Instructions 2003.
414 I reminded the Accounting Officer that all paid vouchers together with their supporting documents should be stamped ‘PAID’ to avoid the risk of duplication of payments.
(ii) Lack of Registers There were no registers being maintained for the receipts and visa stickers. I could therefore not confirm the stocks at hand at the time of audit
Maintenance of registers facilitates proper reconciliations between the receipts and issues and physical balances of Visa stickers.
(iii) Lack of Acknowledgement by Beneficiaries Contrary to Treasury Accounting Instructions, payees did not append their signatures on most of the payment vouchers acknowledging receipt of their cash/cheques. This omission rendered the expenditure doubtful as it was difficult to establish whether the funds reached their respective rightful beneficiaries.
(iv) Inventory It was noted that the inventory register was not up to date as at 30th June 2007 and that all purchases made in September and October had not been recorded in the register.
68.6 Loss of a DVD Player A review of the board of survey report showed that a DVD player acquired in September 2007 at a cost equivalent to Shs.378,200 was missing. On further inquiry, it was revealed that there was a break in at the chancery during which the said item was stolen.
415 The Accounting Officer was advised to notify the Accountant General about the stolen DVD player as required by the sec 16(1) of the Public Finance and Accountability Regulations, 2003.
68.7 Staffing As pointed out last year, the mission is inadequately staffed .This has resulted into the continued employment of the services of a local staff as personal secretary to the ambassador a position which should have been filled by a home based staff‘ administrative attaché given the sensitivity of the post.
Efforts should be made to ensure that the post is filled by the right staff in order to enhance confidentiality among others.
69.0 TRIPOLI MISSION
69.1 Inconsistencies in the Financial Statements Note 10 to the financial statement and the cash flow statement show a sum of Shs.341,880,034 as expenditure on goods and services consumed while the statement of financial performance discloses Shs.316,710,716 on the same item. The inconsistencies in these statements render the financial statement misleading. Adjustments need to be made to correct the error.
69.2 Visa Register I was not availed the visa register for the period July to December 2007. I could therefore not confirm the non tax revenue from the visa sales for the period.
69.3 Cash Survey A Cash Survey on NTR and the operation account was held on 16th October 2007. A sum of US$630 was on hand in respect of NTR and agreed with 416 the visa records while LYD 275.25 (€166) and €110 which was on hand in respect of the operational account did not agree with the cash book. I advised the Accounting Officer to investigate the excess of €266 on the operational account. The Mission should also consult the Accountant General for an appropriate cash limit to be held by the cashier.
69.4 Non Compliance with Procurement Law Procurements totalling to €118,207.8 were made without following the recommended PPDA procedures for bidding, evaluation and subsequent award. The purchases therefore may not have guaranteed competitive prices.
In his written response the Accounting Officer explained that the PPDA regulations could not be adhered to due to the structure and economic environment the mission operates in and that he had requested for a waiver from the PPDA
69.5 Cash Payments During examination of expenditure it was noted that apart from salaries and allowances for home based staff, all mission expenditures are paid in cash. These include purchases of office furniture and equipment, air tickets, rent, utility bills etc. Cash payments in the month of June 2007 alone amounted to €46,000.
Keeping big amounts of cash at the Chancery is irregular and poses a risk to government funds. The practice may also lead to temptations by the cashier to misappropriate public funds.
69.6 Stores Requiring Board off Two Mercedes Benzes registration number 3/60 and 4/60 models 1988 and 1992 require boarding off as they are old, expensive to maintain and they are unnecessary since the Mission has procured a new Mercedes Benz that 417 was expected to arrive in October 2007, and also has a sound Volvo car serving as a utility vehicle.
Secondly, very many old stores including furniture and equipment were in a store which is rented at LYD400 (Shs.52,636) per month.
I advised the Accounting Officer to consult the Secretary to the Treasury and the PPDA for their appropriate disposal. Otherwise, the vehicles will further deteriorate and rent being incurred at Shs.6, 283,636 annually on obsolete stores is wasteful.
69.7 Mission Charter Tripoli Mission was mandated under its Mission Charter to target a 20% annual growth rate of investments from Libya in the areas of banking, housing and ranching, a 50% annual increase in the number of exports to the Libyan market and the fulfilment of the Libyan pledge of investing in a coffee processing plant estimated at US$17m among others. However, I did not see a detailed strategic plan of how the above charter will be achieved. In his written replies, the accounting officer stated that the mission has in place a strategic plan but however highlighted that its implementation may be hampered by budgetary constraints.
69.8 Unused Visa Stickers The Ministry of Internal Affairs revised visa fees from US$30 to US$50 single entry effective 2007/2008. However, by the time of announcement, 10 books of US$30 (serial No. 240051–240650) were still in stock unused. The accounting officer in his explanation stated that he was seeking for advice from the Ministry of Internal affairs. I await the outcome.
418 69.9 Review of Personal Files Incomplete files A review of personal files revealed that personal some files for both home based and the local staff were incomplete with documents like; contract agreements, formal appointment letters, application for employment letters, evidence of qualifications for jobs assigned and confirmation letters. A case in point is the file of the former accounts assistant Ms. Katendwa Joy which had no evidence of accounting knowledge.
It is recommended that the files be appropriately updated and employment given proven competencies.
69.10 Non-Tax Revenue (NTR) • Visa Registration Prior to January 2007 The above register was not availed for audit. I could therefore not confirm the revenue for the period.
• NTR Collections and Remittances to Bank of Uganda Between January and 16th October 2007, US$2,750 (Shs.4,950,000) was collected as NTR in respect of Visa fees. Out of the above amount, US$2,000 was remitted to the Bank of Uganda for the credit of the Consolidated Fund on 6th March 2007, 26th June 2007 of US$1,100 and US$900 respectively indicating that remittances are not regular.
I advised that after balancing and reconciling the visa register to the cash book every month, the remittance to Bank of Uganda should be similarly made regularly to avoid the likely temptation to use the NTR.
The Chancery Ownership It was noted that the Libyan government gave the Uganda Government a building to house the Chancery way back in the 1970. However,
419 certification of title has never been obtained to date. Without the title ownership of the buildings can be challenged.
I urged the Mission to follow up the matter so that title of ownership is secured from the relevant authorities.
70.0 RIYADH MISSION
70.1 Payables An amount of Shs.55, 123,070 was reported as payables for the year. There was however no details to support the figure in the financial statements.
Management was requested for the supporting documentation.
70.2 Excess Expenditure With the approved budget of Shs.757,109,000, the mission spent Shs.771,323,965 thus leading to an unauthorized expenditure of Shs.14,214,965.
The excess expenditure needs to be regularised by way of supplementary appropriation. Management should initiate the process accordingly.
71.0 COPENHAGEN MISSION
71.1 Unauthorised Expenditure Allocation The Mission incurred an expenditure of Shs.61,966,841= in excess of the approved budget without seeking approval from parliament. Against an appropriation of U.Shs.1,409,454,337, the Mission spent Shs.1,347,487,496 leading to an over expenditure of U. Shs.61,966,841.
420 In addition, Shs.211,846,296= was re-allocated to various expenditure vote items without following the procedures prescribed in the regulations.
In a written reply the accounting officer explained that the funds were reallocated due to the under funding on some critical items and that attempts had been made to seek retrospective authority. I however informed her that the practice is contrary to the regulations and advised her to regularize the expenditure.
71.2 Understatement of Expenditure
Note 16 (other operating expenses) to the financial statements indicates that a foreign exchange of U.Shs.13,894,858 was incurred. It was however noted that the figure has not been disclosed in the financial statements. In effect the expenditures have been understated by the loss and the Net worth equally overstated.
71.3 Advances Financial statements show a long-standing advance of Shs.1,679,793 against the Ministry of Foreign Affairs. It’s not clear why the money has not been recovered after all this long.
71.4 Irregular Appointment of local staff The appointing authority recommended in a letter PO/23 dated 28th July 2004 to appoint Mrs. Margaret Otteskor as a Trade Assistant/Officer under local recruitment, based on her academic qualifications. However, she was appointed Foreign Service Officer Grade V (U3 Scale) whereas she does not possess the minimum qualification required for the post.
Besides although she was locally recruited from Copenhagen, the officer was paid disturbance allowance contrary to the standing orders.
421 I informed the Accounting Officer that the appointment of the officer to a higher grade, and the payment of the disturbance allowance were contrary to the regulations
71.5 Nugatory Expenditure
VIP shipping International Ltd, allegedly based in London, was paid Dkr 75,850 (US$ 13,600) to ship personal effects of one of the mission staff. However, the goods were shipped and abandoned in Mombasa instead. Another firm, Worldwide Shippers Ltd was contracted and paid Dkr 36,638.41 (US$ 6,496) to clear and transport the goods to Kampala. Included in this cost was demurrage of Dkr 5,689.8 (US$ 1,016). In addition another Dkr 1,689.45 (US$ 269) was paid to AIG for insurance cover. Therefore the additional expenditure of DKr 38,327.86 (US$6,765) was rendered nugatory. Further investigations revealed that VIP shipping International does not exist.
In a written response the Accounting Officer explained that matter was reported to the Police and the Royal Danish Ministry of Foreign Affairs and that the mission lawyers were pursuing the company to recover the extra money which the Mission had paid.
71.6 Staff Telephone Bills A test check revealed that the mission paid for international calls of the Administrative Attache’ totaling DKr 1,817.94 in contravention of standing orders’ requirement to pay only 2/3 of all local telephone bills of home based staff.
In her written response, the Accounting Officer promised to recover the amount in question in full from the officer.
422 71.7 Unspent Balances Irregularly Utilized It was observed that at the end of the FY 2005/06 a cheque No. 9110859 was written for Dkr 100,050 (US$ 20,000) for the payment to the painter although no painting had taken place. In July 2006 this cheque was cancelled. The money which should have been returned to the consolidated fund as unspent previous year’s balances was instead receipted as if it was a release in the following financial year (2006/07) and subsequently spent contrary to the regulations.
71.8 Renovation of Chancery A total of Dkr 167,500 (US $31,018.51) was paid to M/s. Rodgivende Ingeinor for the renovation of the cellar of the Chancery, staff kitchen and hall. Inspection revealed that no work had started.
In his written reply, the Accounting Officer stated that although physical renovation had not started by year end, the engineering workplan had been completed. He further stated that a cheque was written to capture this financial commitment but it was to be released to the contractor only after the work had been completed.
71.9 Inventory Book The Mission does not have a proper inventory book. Instead the inventories are written on lists. In some cases like the reception, no records were maintained and the temporary lists have a lot of anomalies like shortages, non-recording, etc. I advised the Mission to open a proper inventory for all premises either rented or owned.
423 71.10 State of Government Assets 71.10.1Official Residence The residence is located at Niesandrsensves 82 Gentofte. The basement was damp and water was leaking through the walls from outside. The PVC sheet of the roof needs replacement as well as the drainage system.
71.10.2The Chancery This is located at Sofievcj1j Dk 2900 Hellerup. There was a sign of water leakage in the toilet roof which houses an apartment occupied by the Administrative attache’. There were cracks in the ceiling and electrical wires in the basement need attention. The store walls need attention as well. The basement upper foundation had cracks underneath.
72.0 NAIROBI MISSION
72.1 Un-authorised Excess Expenditure
An Analysis of The Statement of Appropriation Account (Based on nature of expenditure for services) revealed that there was an over expenditure of Shs.381,870,355 on various expenditure items during the year for which no authority had been given to the Mission.
Details are shown below:-
Expenditure item Actual Budget Excess expenditure expenditure Medical 79,353,927 55,682,642 23,671,285 Printing 35,249,777 31,834,838 3,414,939 Banking Charges 5,264,092 2,100,156 3,163,936 Telecommunications 57,873,369 60,648,936 2,775,567 Rent 80,305,368 79,225,279 1,080,089 Travel Inland 25,366,880 24,449,367 917,513 Travel Abroad 32,194,706 30,511,820 1,682,886 Maintenance 27,570,555 24,966,372 2,604,183 Total 39,310,398
In the absence of such authority, the expenditure is deemed irregular.
424 I advised the Mission to have the over expenditure regularised in accordance with the Regulations.
72.2 Payables
Included in the accounts are payables of shs.210,935,207 relating to outstanding commitments in respect of hospital bills, vehicles maintenance, telephone arrears. However, I have not been provided with supporting documents like such as invoices to enable me certify the balance.
Include in these outstanding commitments are telephone expenses which were overspent by Shs.470,873,369 with much of this expenditure arising from usage of private telephone lines rather than the official telephone lines. The Mission appears not to have exercised good control over the use of telephones.
72.3 East African Compensation Fund (EACF)
Records have revealed that the Mission operates a bank account No.100354101 at Citi Bank (Kenya) to handle money from the defunct East African Compensation Fund. On 30.06.07, the account had a credit balance of shs.5,290,965 (K.Shs.211,638.60).
However, the year end cash balance of K.Shs.211,638.60 was not was not disclosed in the Mission financial statements for the year 2006/07. The movements were also not properly explained and disclosed.
72.4 Cash and Cash Equivalents
The Certificates of Bank balances and Bank reconciliation statements provided to support the cash and cash equivalents figure of Shs.22,626,490 in the accounts do not add up. I cannot therefore confirm that the balances are fairly stated on these accounts.
425 72.5 Advances not Recovered
A total of shs.42, 441,035 advanced to various officers remained un- accounted for by the end of the financial year contrary to regulations.
I advised that all money advanced to officers should be followed up for accountability or be recovered in accordance with the Regulations.
72.6 Medical Expenses
The Mission subscribes to Nairobi Hospital (NH) for medical and dental treatment and hospitalization of staff as is required by the Foreign Service Standing Orders. However, instead of using NH facilities, staff tendered reimbursement claims purporting to have obtained treatment from other private clinics and private Doctors.
During the period under review, funds reimbursed in this manner amounted to Shs.18,062,050 (K.Shs.722,482). The validity of these claims needs to be properly explained.
72.7 Renovation of the Ambassador’s Residence
A Local Kenyan firm was contracted to ‘Redecorate the Ambassador’s residence for a contract sum of shs.12,500,000 (K.Shs.500,000). Whereas an advance of Shs.9,500,000 (K.Shs.380,000) was initially made to the firm ,works valued at only shs.4,056,000 (K.Shs.162,240) had been completed and yet there was no evidence of ongoing contract works. During the audit inspection carried out in November 2007 the Accounting Officer admitted in an interview that the contractor had indeed abandoned the works.
The Mission is likely to suffer a financial loss of Shs.8,444,000 (K.Shs.337,760) being the value of the uncompleted works.
426 72.8 Replacement of Existing Two Passenger lifts in Uganda House
In 2004, the Mission undertook to replace the existing lift equipment by entering into a contract with a Kenyan firm for supplying and installing two(2) new eight (8) passenger lifts for a contract price of Shs.151,023,125 (KShs.6,040,925). The life expectancy of the two (2) new lifts was quoted at 30 years. The supplier was paid Shs.146,933,800(K.Shs.5,877,325) of the contract price with only Shs.4,090,000 (K.Shs.163,600) remaining outstanding.
Although the new lifts with a stated life expectancy of 30 years were installed, they did not function as anticipated, and one of them is not functioning at all. According to a ‘Technical Survey’ commissioned by the Embassy, several construction items are still outstanding and some of them are a potential occupational hazard to passengers travelling in these lifts.
The ambassador stated that this matter has been handed over to lawyers for litigation. The progress on the litigation process is still awaited.
72.9 Outstanding Non-Tax Revenue (NTR)
A total of Shs.804,506,372 was collected in respect of rental income, from tenants on the Uganda House. However, records submitted for audit indicate that shs.66,712,825 (K.shs.2,668,513) remained outstanding as at 30.06.07. Efforts by the Kenyan property consultants firm, contracted to collect the rent have not yet been fruitful in having these arrears recovered.
The Accounting Officer explained that 13 cases were in court and the other three (3) had been forwarded to the Auctioneers for necessary recovery action. I await the outcome of this effort.
427 72.10 Non Payment of Salary and Foreign Service Allowances and Resettlement of an Officer
A new Foreign service officer posted to the Nairobi Mission did not have his house rent paid by the Mission since November 2007 at a rate of Ug.Shs.1,012,500 per month. Due to the Mission’s failure to also furnish his house, the officer continued staying in a hotel at a cost of Shs.131,125 per day. The total of Shs.2,229,125 spent by the Mission in this manner is considered nugatory expenditure. In addition, the Mission had not paid the new Officer’s entitlement of Salary and Foreign service allowances totalling Shs.6,841,242, frustrating his need to settle his family.
73.0 DAR ES SALAAM MISSION
73.1 Un-banked Revenue
A total amount of TZShs.162,000 and US$ 550 collected as revenue at the mission was found not banked contrary to regulations. The Accounting Officer explained that the amount was diverted to meet other mission expenses.
73.2 Temporary Travel Documents
The mission issues Temporary travel documents following application using a serially numbered form A at a cost of TZ Shs.6,000 each. However due to a shortage, Form A’s were photocopied, and one serial number was used by many applicants. This is a control weakness that could be abused to cause financial loss. The Mission accounting officer stated that she had not been aware of serially numbered forms issued by the Ministry of Internal Affairs.
428 73.3 Excess Expenditure
The mission incurred expenditure amounting to Shs.98,004,145 over and above the approved budget estimates without required authority. I have advised that authority be obtained to regularise this expenditure.
73.4 Salaries of Local Based Staff
Total salaries and allowances paid to local staff, including Drivers, cleaners gardeners and security guards at the Mission increased from TZ Shs.3,512,00 to TZ Shs.4,827,000 per month since May 2007.
However it was noted that:-
• The Salaries are not tagged to any salary scales and lack criteria in fixing.
• Employees do not have service contracts and there are no defined terms and conditions of service.
• One staff employed as a house keeper is paid a monthly salary of US$ 450 but does not have an appointment letter, and has no personal file kept at the mission. The terms of his engagement are not clear.
The Accounting Officer stated that consultations were being made to finalize salary scale structures and terms of service.
73.5 Land and Buildings
The mission owns three properties which were obtained from government of Tanzania in exchange for properties given to Tanzania government in Kampala.
• However, as stated in my previous report (2004/05) no copies of titles were availed to confirm that the Uganda government owns these properties, or that the transfers were properly completed. 429
• The buildings were found completely dilapidated and in the absence of releases for the development budget , the Mission had to divert part of staff benefits in order to cater for reconstruction of the building.
I advised that this capital development expenditure be regularized with the Ministry of Finance. The Accounting Officer in his response, stated that delay in obtaining land titles was because the Government of Uganda had been slow in processing titles to land given to Tanzania government in the swap deal.
73.6 Offloading of Expenditure by Ministry of Foreign Affairs
• Inadequate budget on transfer related costs
A total of US$69,038.8 was incurred by the mission in respect of reporting and departing Foreign Service Officers’ allowances (Clothing, disturbance and settlement allowances) and transport. It was however noted that, allowances for staff transferred to the mission, ordinarily paid from the Ministry of Foreign Affairs budget were pushed to the Mission without a corresponding increase in the budget release. As a result other activities were curtailed in order to make savings for such payments.
• Courier services
The mission receives Diplomatic bags from the Ministries of Internal Affairs and Foreign Affairs through DHL. However, the mission pays courier expenses for diplomatic bags received (not budgeted for) in addition to paying for the cost of their own diplomatic bags sent to Ministries. This affects the budget performance of other items.
430 73.7 Education Account
The Ministry of education remits funds for allowances and transport of Ugandan students studying in Tanzania, who are required to physically sign for them. However scrutiny of the payment records revealed that 10(ten) students had consistently not signed for four allowances totalling US$3,900, casting doubts over their physical existence.
The Accounting Officer in her response stated that the Ministry of Education was informed of absentee students together with the accumulated allowances but advised the Mission to utilise the funds to pay students who had been left out of the October, 2007 release.
74.0 ABUJA MISSION
74.1 NTR Remittances Non Tax Revenue totalling ₦ 673,350 equivalent to Shs.52,063,236 was collected and purportedly remitted to Bank of Uganda for the credit of the consolidated fund. However Treasury acknowledged receipt of Shs.18,395,969 leaving a balance of Shs.33,667,267 unacknowledged. I could therefore not confirm whether the funds were received by the Treasury.
In a written reply, the Accounting Officer attributed the delays to the Bank of Uganda and Treasury for issuing and sending acknowledgement receipt of the funds remitted to the mission.
74.2 Circumvention of the Procurement Regulations A test check revealed that a sum of ₦ 12,197.50 (Shs.172,872,882) was spent to purchase a representation car and to renovated the official residence. However, although the amount involved was substantial, the mission did not follow the prescribed procurement procedures contained in 431 the Public Procurement and Disposal of Assets Act and Regulations contrary to the procurement procedures without a waiver from the PPDA.
In his written response, the Accounting Officer acknowledged the omission and stated the Authority had released fresh guidelines for Missions on Procurement Procedures that will be followed in future.
74.3 Undeveloped Plot The mission has an undeveloped sizeable plot, strategically located, which was obtained in 1994. During inspections it was revealed that the local authorities had threatened to revoke the allocation if the plot remained undeveloped by December 2009. The mission spends 6.5m Naira (U Shs.92,125,984) annually on rent for the chancery and residences which amount could be saved if the plot was developed for the chancery and other residences.
In his written response, the Accounting Officer stated that the mission has captured the development of the Plot in the financial years 2008/09- 2010/11.
74.4 Payables The mission reported long outstanding telephone bills payable to the now privatized Nigerian Telecommunication Ltd totalling ₦ 2,753,110.22. The new management of the Company, in a drive to recover the monies, engaged lawyers to handle the issue on their behalf. The mission may be faced with litigation and the associated costs if the matter is not addressed promptly.
I urged the mission to continue soliciting for funds from the Ministry of Finance to settle these bills and save the mission from an eminent embarrassing situation.
432 In his response, the Accounting Officer indicated that consultations are being made with the Ministry of Finance to ensure that the bills are paid.
74.5 Mission Charter The Abuja Mission was mandated under its Mission Charter to target a 30% increase in Nigeria investment in Uganda, 20% growth of exports to Nigeria and strengthen inter institutional cooperation between the Uganda and Nigeria, among others. The report on the implementation of the mission’s charter was last made in December 2006. However, I did not see a detailed strategic plan or corporate plan to guide the accomplishment of the charter.
I recommended that the mission should prepare a strategic plan with clear time frames and measurable outputs to ensure achievement of the mission’s objectives.
74.6 Official Residences By time of inspection, some renovation work had started on the official residence whose roof walls were leaking, had started peeling off and also developing cracks. The furniture and equipments were as well in a sorry state and required replacement to give the official residence the status it deserves.
In his written response, the Accounting Officer emphasized the need for major renovations but the mission was constrained by the lack of funding. He promised that some equipment, furniture and furnishing will be done in the next budget.
74.7 Nigeria Loan to Uganda It was noted from the bilateral co-operation files that the Government of the Federal Republic of Nigeria extended US $ 9.0 millions in 1992 to the Government of Uganda repayable in 16 equal installments effective 1995. It bore interest of US $ 2,413,972.10 up to 30th January, 2003 when it was to 433 be finally repaid. The purpose of the loan was to establish a pharmaceutical factory as well as an enterprise for manufacturing hardware products. The loan has never been repaid, (2007).
I asked the mission to get an update from the Ministry of Finance regarding the utilization of the loan and requested that it be booked in the stock of Public debt with the view of repayment.
75.0 BRUSSELS MISSION
75.1 Excess Expenditure The Embassy incurred an excess expenditure of the amount appropriated for it by Shs.196,182,775 on various items shown below. Excess expenditure is an indication of lack of budgetary controls.
I have advised the Accounting Officer to seek for retrospective authority for the excess expenditure. Item Actual Budget Variance Goods and Services 465,314,039 416,936,000 48,378,039 Consumption of 227,804,736 80,000,000 147,804,736 property, plant and equipments Total 693,118,775 496,936,000 196,182,775
75.2 Non-Tax Revenue (NTR) Collections NTR returns for the period under review revealed that the Mission collected a total of €75,749 from the issue of visas and sale of passports.
The following observations were made: - • There were no remittance advice slips and acknowledgement receipts provided to confirm remittances of €67,000 to the Treasury.
434 • No counterfoils of used visa stickers were provided to enable me reconcile the reported collections.
The remittance advice slips and acknowledgement receipts for funds remitted to Treasury and visa stickers should be provided for audit.
75.3 Rent A total of €65,542.42 was paid to various landlords as rent for the accommodation of home-based staff.
However, the payments were not supported by tenancy agreements and acknowledgement receipts to enable me confirm their authenticity.
I have requested the Accounting Officer to avail the tenancy agreements together with the acknowledgement receipts for audit.
75.4 Staff Salaries A total of €105,300 and €139,168.31 was paid to local staff and home- based staff respectively as their monthly emoluments. However, the payees did not sign for the payments as proof of receipt of funds.
I have advised the Accounting Officer to ensure that all staff sign for any money they receive as proof of receipt of funds.
75.5 Unauthorised Transfer The Mission made unauthorised l transfers of funds from visa accounts to operational account 310-0216600-85. The details are below: -
Date Payees Amount € 2/4/07 A/C 310-0216600-85 20,000.00 24/4/07 A/C 310-0216600-85 21,000.00
435 19/10/06 A/C 310-0216600-85 10,000.00 10/5/07 A/C 310-0216600-85 21,000.00 TOTAL 72,000.00 There were also numerous verbal transfers from the operational bank account to various individuals. Such verbal communications to banks are prone to abuse and can lead to fraud by unscrupulous personnel.
I have urged Management to desist from such practice.
75.6 Chancery Renovations A total of €77,236.82 was incurred in respect of renovations of the Chancery. The renovations included Roof works and Ground floor tile work done at a cost of €73,976.25 by a local firm WvD Dak & Gevelteniek. The balance of € 3,260.57 was used to paint the reception & Exterior of the Chancery. The following observations were made: -
• All the transactions appear not to have been handled by the Mission’s contracts committee as there were no minutes or any other correspondences provided for audit. It is not clear how the companies which did the work were sourced, evaluated and finally awarded contracts.
• It is not clear whether works were completed or not since no inspection or certificate of completion was availed for audit. I could not confirm the quality of the work.
• Although Capital development releases were only Shs 80,000,000(approx€35,000), the mission used €77,236.82 for capital expenditure. The source of the extra funding is not known.
Management is required to avail details of source of funding, procurement procedures followed and evidence of completion. 436
75.7 Audit Inspection Report 75.7.1 Cash Survey A total of €250 was found on hand on 27th August 2007 in respect of Visa (€150) and Imprest (€100). These could not be balanced effectively as the visa register was written up to 21st August 2007 and no Imprest ledger is in use. Regulations require cash books to be written and checked on daily basis.
I recommend that the Accounting Officer strengthens procedures of monitoring operations
75.7.2 Overpayment of Salary/Foreign Service Allowance Although the exchange rate of the dollar to the Euro is 1 Euro equivalent to US$1.29, the Mission pays salaries and Foreign Service Allowances at the rate of 1 Euro equal to 1 dollar thus overpaying the salary/Foreign Service Allowance by 29%. The overpayment per month total to €4,213.59 as detailed in Appendix ‘A’ to this report.
The Accounting Officer should have the excess payments recovered from beneficiaries and in future put exchange rates into consideration to avoid exchange rate gains going to staff.
75.7.3 Salary Advance Salary advance is routinely given. In some instances, these are recovered in one lump sum but in others in four instalments. Contrary to regulations, no advances ledger is maintained. Total advances given and recoveries made could therefore not be verified.
437 Authority to pay salary advances should be sought. Procedures to recover and to record salary advances should follow laid down regulations.
75.7.4 Payment of Utility Bills The Mission does not recover personal share on telephone and heating charges from the two Deputy Heads of Mission. According to Standing Orders, it is only the official residence which enjoys these privileges. The authority which was produced signed by the Head of personnel on behalf of the Permanent Secretary had been cancelled by the then Permanent Secretary.
Management is advised to stop henceforth extending these benefits to the two deputy heads as it is a violation of standing orders.
75.7.5 Warm Clothing/Climatic Clothing Allowance The Mission pays climatic allowance of US$500 as well as warm clothing allowance of US$300. This is a double payment as the latter is for other public officers not Foreign Service Officers. Standing Orders allow Foreign Service Officers to be paid only climatic allowance.
I have observed continued disregard of regulations an indication of weak management controls. It is recommended that Accounting Officer recovers the double payments made to Foreign Service officers.
75.7.6 Baggage Allowance Three officers claimed baggage allowance totalling €636 as follows: - Name Exp. Voucher Amount (€) 1. Mrs. A. Kyeyune 44/6/07 212 2. Mrs. Z. Mayanja 45/6/07 212 3. Mr. R. Byereta 46/6/07 212 Total 636 438
However, receipts or airline coupons were not attached thus making the payment unsupported. Supporting documents should be availed for verification. 75.7.7 Shared Costs A total of €2,197.60 (EV 61/6/07) was paid to Savalamos Diamntepoulou being shared costs of water, hot water, heating, and electricity for the flat occupied by the Administrative Attaché. No evidence was produced to show that these costs were indeed originally billed by the various service providers. 20% was not recovered from the Administrative Attaché as her personal share for heating and 100% for lighting.
Original bills to support costs of water, heating and electricity should be availed for verification. The Administrative Attaché should complete payment of her 20% share.
75.7.8 Medical Treatment A sum of €7,000 was deposited with Foldi Clinic Germany (EV 20/7/07) for the treatment of Ambassador Acema. Documentation relating to final bill or any possible refund from the Medical Insurance was not availed.
The Accounting Officer should endeavour to avail the necessary documentation for verification.
75.7.9 Property Rate A total of €247.50 was paid to Gemeente Wassernaor as property rate for property situated at Fresiaplean 14 2241 xs Wassenaer. This property does not appear to belong to the Embassy.
An explanation is awaited from the Accounting Officer.
439 75.7.10Extra Works A total of €6,101.50 was paid to Gevetech for extra works without going through proper procurement process. The work included placing of waterproof tiles at the entrance and ground floor.
The Accounting Officer should explain why proper procurement procedures were flouted.
75.8 General Administrative weaknesses (i) Counterfoil Register Although a record is maintained on the computer, it does not conform to the prescribed format in that it does not show the name of the person to whom counterfoils have been issued to neither do the recipients sign for them.
(ii) Inventory Book The Mission does not maintain an inventory book on the prescribed format. It only maintains lists which it keeps on changing. A verification of those lists showed a number of anomalies like shortages, non-recording of items, etc. at the official residence, the Chancery and the residence of the Minister/Accounting Officer and the Administrative Attaché. Please obtain and maintain a proper inventory book.
(iii) Safes There are two safes but one was not opened during audit. It was explained that it does not work. It is recommended that this safe should be boarded off.
75.9 Assets (i) Vehicles The Mission owns three vehicles: - • Volvo 440 • Lexus 300 GS • Mercedes Benz E200 (R) No log sheets for the movement of vehicles were produced for audit. I could therefore not verify their movement and fuel use.
(ii) Structures The Mission owns 3 buildings in Brussels: - • Official Residence – Clos des Lauriers 35 – 1150 This building is located in a prime area and it used to be in a magnificent shape. It has now been condemned as the roof has caved in and plumbing and electrical wiring are all rotten. The building is vandalised and all windows and door glasses have been broken.
• Temporary Official Residence – Maurice Despnet 22 1933 Sternebeck The building is in a generally good shape. However, it was noted that the garage doors are not shutting properly, the sewerage pipe from a toilet is blocked and the heater is not fully operational. The worst part is the leakage through the walls up to the ground floor.
• The Chancery – Avenue de Tervunen 317 1150 – Brussels Although the roof was repaired at a cost of €75,000, ceilings are in a bad shape. I was informed that the support of the roof is weak which may lead to the roof to collapse once again. The basement is in bad shape as cement on the supports are all cracked and the walls are stained.
All the walls in the Accountant’s office, Driver’s office, Tourist office and toilets are stained and tiles and/or wall papers in a bad shape. Front and toilet doors do not shut properly. In the Third Secretary’s office windows do not close. A number of window glasses are broken.
441 Immediate attention should be paid to this.
76.0 ROME MISSION
76.1 Absence of Contracts Commitees PPDA regulations provide for contracts committee in all procuring and disposal entities with an independent vote, such as the Embassy. The embassy, however, does not have a properly constituted contracts committee and there was no evidence that the committees were ever nominated and approved in accordance with the provision of the Procurement Act.
76.2 Transfers received from Treasury A schedule of releases from the treasury indicates that Shs.1,734,589,417 was released for recurrent expenditure and Shs83,701,000 as supplementary making a total of Shs1,818,290.,417. However, the accounts reported Shs.1,949,293,965 as received in the statement of Financial performance.
I asked the Accounting Officer to provide further explanation of the difference or else adjust the accounts.
76.3 Non Tax Revenue
A total of Shs52, 036,720 was recorded as revenue collections for the period. However the collections could not be verified because NTR returns for the last quarter were not submitted.
Furthermore, the Embassy incurred a shortage in NTR collections of Shs.2,460,381.
442 76.4 Cash and cash equivalents
There were no bank certificates to confirm the Cash and cash equivalents of Shs.20,384,262 stated in the accounts.
76.5 Payables
Detailed information in form of a schedule to support payables amounting to Shs.1,249,517,265 included in the accounts, was not provided. I could not ascertain that these balances are fairly stated.
76.6 Statement of Appropriation Account (Based on nature of expenditure for services)
There was an over expenditure of Shs.631,866,92 during the year for which no authority was sought by management.
Details are shown below:-
Item Budget Actual Variance Employee costs. 691,151,000 1,029,726,486 338,575,489 Goods And Services 412,338,040 628,762,252 216,424,212 consumed Property plant and 76,867,191 76,876,791 Equipment Total 631,866,892
In the absence of such authority, the expenditure is rendered irregular.
I advised the Embassy to regularise the expenditure in accordance with the regulations.
76.7 Non – Remittance of Non-Tax Revenue
The embassy had collected NTR amounting to €20,359 largely from Visa fees and passport renewals. However, all the NTR collected was utilized at
443 source contrary to regulations that require an Accounting Officer to ensure prompt collection and proper accounting for revenue.
Although the Accounting Officer explained that his budget was not sufficient for the Embassy needs, there was no authority whether from parliament or secretary to the Treasury for utilization of this NTR from source. There was also no evidence that NTR collection amounting to Shs.108,305,189 reported in the last year accounts was remitted to the Treasury.
76.8 Recall of a Home Based Staff and Related relocation Costs
The audit inspection revealed that, an Officer whose tour of duty in Rome expired in October 2006, irregularly continued working and drawing all his allowances up to August 2007. The Ministry of Foreign Affairs directed the Accounting Officer to meet the costs of the Officer’s relocation with the shipping costs alone estimated at about €15,000.
Directives of this nature pressure the Embassies into unauthorized expenditure because Embassies do not budget for relocation costs, a cost which should be borne by the Ministry.
I recommended that The Ministry of Foreign affairs properly plans and budgets for posting of officers.
76.9 Medical Refund
Foreign Service standing orders require that officers should register with a National Health Service and where drugs prescribed are not provided free through the National Health Scheme, the funds will be chargeable to the mission budget. However the inspection revealed that officers at the embassy who are not registered with the National Health Service provider had been paid a total of €14,120.32 as refunds for medical expenses.
444 In the absence of prescriptions to support the refund claims, I could not rule out that the system is being abused by claiming refunds where no actual expenses were incurred.
76.10 Rent
A sum of Euros 199,926.71 was paid out to various landlords as rent for the chancery and staff residences. However, I was not provided with translated tenancy agreements to show the rental payable. Besides the payments are not acknowledged as received by the payees, thus rendering them doubtful.
I asked the Embassy to provide translated tenancy agreements and acknowledgement receipts for the rental payments made.
76.11 Internal Control Weaknesses: Un-authorized Expenditure
An examination of a sample of payment vouchers relating to the Agricultural Attaché’s office revealed that payments amounting to € 2606.3 in March 2007 and € 3493.98 in May were made without the authority of the Embassy accounting officer.
The Embassy Accounting officer did not endorse on these vouchers to confirm that the expenditure was incurred under the authority quoted, or that the goods and services paid for were duly and properly delivered in line with regulations. Expenditures of this nature is potentially fraudulent.
I recommended that all payment vouchers must be approved by the appointed Embassy Accounting Officer as required.
76.12 Remittances to the Agricultural Attache
A semi autonomous office of Agricultural Attaché was established in July 2005 probably to promote Uganda’s agricultural products in Italy and the 445 neighbouring countries and to encourage transfer of agricultural technology from the region. The Headquarters of FAO are also in Rome.
Although the mandate of the Head of the mission ordinarily covers this scope and the mandate of the accounting officer of the mission also covers all resources in the mission, operationally the office of the Agricultural attaché is detached from the normal Embassy operations.
During the financial year 2005/2006 Shs.221,740,650 was remitted directly from the Ministry of agriculture and Shs143,000,000 was remitted in 2006/2007. These funds were not managed by the substantive Accounting Officer and instead were accounted for by the Agricultural Attaché himself directly to Ministry of Agriculture. The Embassy handles other technical matters such as Tourism, Trade ,Health, Politics, Science and technology all harmonized under the substantive Accounting Officer.
I recommended that measures be put in place to allow the Embassy accounting control exercise some control over the funds remitted to the Agricultural Attache.
76.13 Rent arrears owed to Zambian Government
The Uganda Embassy in Rome was at one time housed in the Zambian government building under a tenancy agreement which ran from 1995 to March 2004.The Monthly rental was fixed at US$7,812 (12,500,000 lira) in 1995 later translating to € 6,455.71 with the introduction of the Euro.
Correspondences between the Uganda and Zambia heads of Mission suggest that the amount owed now stands at about €373,165.44 even after a recent direct payment of €200,000 by the Government of Uganda.
There has been bitter exchanges between the two Embassies over amount owing and the settlement of these arrears. 446
I advised that proper reconciliation of the amount due, paid and outstanding should be done to resolve the problem that could affect the diplomatic relations between the two countries.
77.0 JUBA MISSION
77.1 Incompletely Vouched Expenditure
Contrary to financial regulations, a total of US$4,802 paid to various mission officers lacked appropriate supporting documents like loose minutes, invoices, delivery notes and acknowledgement receipts.
I have requested that the Accounting Officer provides all supporting documents for audit.
77.2 Payments without Contracts Committee Approval
The procurement law requires that all procurement proposals be approved by the contracts committee. However, the Mission spent a total of US$30,275 on purchase of laptops and a Nissan pick-up without following the recommended procurement procedures.
There is no evidence that the procurement was approved, competed for, evaluated and approved by the contracts committee. In the circumstances I could not confirm that the Mission achieved value for money.
77.3 Non tax Revenue
The Mission reported in the accounts a total of Shs.39,707,751 as Non- Tax Revenue collected for the period. Whereas remittance advice slips were eventually provided for audit, no acknowledge receipts from Treasury were
447 presented to confirm that the entire amount was remitted and received in the Consolidated Fund.
I requested that acknowledge receipts from Treasury be provided for.
77.4 Misstatement of Comparative Balances in the Financial Statements
There are two comparative balances restated in the current year accounts which differ from the balances reflected in the audited accounts for 2005/2006 as detailed below. Item 2005/2006 Audited Balance Accounts Balance posted In current year Accounts. Grants paid 0 9,869,272 Net cash inflows from 26,793,742 9,749,904 operating activities
The Accounting Officer attributed the difference to changes in the financial statements template. However the adjustments were not properly explained.
77.5 Internal Control System
General internal control weaknesses observed at the mission included:- • Claims were not supported by documents like requisitions, invoices and demand notes as required by the Treasury Accounting Instructions. • Payments were made in cash rather than by crossed cheques. • Payments for rent were not supported with tenancy agreements while others were not acknowledged as received by the landlord. • No cash books, ledgers or reconciliations were availed. • Only photocopies of the Mission’s expenditure vouchers were submitted for audit. • Payments for travel were made to individuals instead of flight company. 448
78.0 KINSHASA MISSION
78.1 Submission Of Incomplete Account Returns
The following documents, which are part of the monthly account returns for both recurrent expenditure and revenue collection, were not provided making the returns submitted incomplete for audit. Details are: -
• Revenue Receipts • Cash book – Expenditure • Cash book – Revenue • Expenditure Abstracts • Bank Statements • Cash Balance Certificate • Bank Reconciliation Statement • Monthly expenditure returns reflecting cumulative releases and expenditures. • Monthly revenue returns reflecting cumulative monthly collections and remittances to Bank of Uganda.
In a related development account Returns for both recurrent and revenue for the period January – June 2007 were not submitted for audit. This renders the funds released for that period totalling Shs.600,539,618 un- accounted for.
I advised the Accounting Officer to ensure that all the missing records and account returns are submitted for audit.
78.2 Internal Controls
449 Generally the Internal controls in place were inadequate as explained below:
(a) Requisitions For Payment
I noted various expenditure vouchers prepared and paid without supporting documents like loose minutes form the claimants and requisitions.
I advised the Accounting Officer to ensure that all payments are requisitioned and approved as required by regulations.
(b) Vouchers Not Stamped ‘Paid’ All the expenditure vouchers plus their supporting documents were not stamped ‘Paid’ as required by Treasury Accounting Instructions. This exposes the mission to the risk of double payment.
I urged the Accounting Officer to always stamp ‘paid’ on all the expenditure vouchers together with the supporting documents to mitigate against double payments.
(c) Official Stamp For Accounting Officer And Charge De Affairs
It was noted that the Mission does not have separate official stamps for the Accounting Officer and the Charge de affairs, which could have been used to stamp on the vouchers whenever the Accounting officer’s signature is appended. This would be one way of minimising signature forgeries.
I urged the Accounting Officer to make arrangements to buy official stamps for his and Charge de affairs for official use.
78.3 Circumvention of procurement regulations
450 The mission procured a computer at Shs.5,328,750(US$ 3,045) without using competitive and transparent methods as provided in the PPDA Act and regulations. At least three (3) quotations from different firms should have been obtained, compared and evaluated with a view of obtaining the most economical, efficient and effective services.
I further noted that the supporting invoices/receipts quoted an amount of only US$ 2,373, thus an overpayment of US$ 672.
I advised the Accounting officer to always follow the procurement regulations. I further recommend that the amount overpaid to the supplier be recovered.
78.4 Unspent balances According to the statement of financial position the mission had unspent balances on the expenditure account of Shs.362,025,654 representing 48% of the total transfers from the Treasury. This implies that there is either over budgeting resulting into the mission being allocated too much funds, which it cannot put to use or management is inefficient.
I urged the Accounting officer to justify the need for the excess funds.
78.5 Rent payments. The Mission pays US $3,000 and US $4,000 per month for the Ambassador’s residence and the Chancery respectively. Although the Mission is allowed to pay three months in advance, by the end of the financial year in June, 2007 the Mission had paid up to November 2007, five (5) months in advance. It appears the Mission’s budget is overstated to occasion such savings that has enabled upfront payment of 5 month’s rent.
451 79.0 GENEVA MISSION 79.1 Unauthorised expenditure
The mission incurred unauthorised excess expenditure of Shs.105,522,025 without authority as shown below:
Actual Budget Excess Expenditure Expenditure FSA 624,937,648 624,192,000 745,648 Welfare & Entertainment 10,683,814 10,000,000 683,814 Printing, Stationery, 13,550,424 10,000,000 3,550,424 Photocopying and Binding Telecommunications 32,847,795 10,000,000 22,847,795 Insurances 12,409,750 4,999,999 7,409,751 Travel inland 21,002,980 10,000,000 11,002,980 Travel abroad 32,002,911 10,000,000 22,002,911 Maintenance-vehicles 17,799,266 9,000,000 8,799,266 Machinery & Equipment 48,479,436 20,000,000 28,479,436 Total 105,522,025
Excess expenditure indicates breakdown of controls over budgetary expenditure.
I recommend that all mission operations should be budgeted for and approved by Parliament as required by the law and Government should make a comprehensive review of the Mission operations with a view of ensuring that the Mission is facilitated adequately to pursue its objectives.
79.2 Unexplained Receivables
Examination of accounts revealed that there were receivables of Shs.41,166,639 in the statement of financial position which were not properly explained. A review of the relevant explanatory note 21 referred to only indicate that they were advances whose details were not provided for audit.
452 In his written reply the Accounting officer explained that the amount relates to salary advances to staff and they have been fully recovered.
I recommend that as far as possible management should adhere to Government regulations on advances. Meanwhile evidence of recovery of all funds is awaited.
79.3 Overpayment of Allowances
During audit inspection it was noted that officials at Geneva Mission awarded themselves payments outside the approved terms of service. For instance, the Head of Mission was paid FSA of US$3,149 instead of US$2,180 p.m. (total 17,442) and the Accounting Officer was paid US$2,700 instead of US$1,776 p.m. (total 34,188). The total amount overpaid to the six officials from the time they were posted to the Mission to the time of audit inspection amounted to US$112,902, which is recoverable because payments are contrary to their terms and conditions of service and entitlements. In his written submission, the Accounting officer explained that owing to the high cost of living in Geneva the mission was authorised in 1996 by the Permanent secretary Ministry of foreign affairs to pay the Geneva Mission staff Foreign Service allowance based on the Tokyo rate with effect from July 1, 1996. He also added that there was lack of proper coordination within the Ministry of Foreign affairs which created the contradictions in the letters spelling out the emoluments of officers posted to Geneva and what was actually being paid from July 1, 1996.
I advised the Accounting officer to liase with the relevant authorities to clarify the matter, otherwise the continuous payment of FSA above the officers’ entitlement was irregular and the amounts so far over paid recoverable.
453 79.4 Circumvention of Public Procurement Regulations
Examination of accounts revealed that a total of Shs.107,307,809 (CHF 76,009.75 0r US $ 61,319) was incurred on the acquisition of various goods and services required for the smooth running of the mission. The following observations were made:
a) Absence of a Properly Constituted Contracts Committee
The Embassy is an independent vote and therefore qualifies to be a procuring and disposal entity. Whereas the PPDA Act Section 27-28 and the PPDA regulations Section 42-56 provide for contracts committees in procuring and Disposal entities. It was noted that the embassy does not have a properly constituted contracts committee as indicated below:
Section 27(2) of the Act states, “The members of the contracts committee shall be nominated by the Accounting Officer and approved by the secretary to the Treasury”. No evidence of nomination and approval was availed to me.
Section 27(1) of the Act states “subject to sub-section (2), a contracts committee shall be composed of the members specified in the third schedule” The third schedule lists the membership as, a Chairperson, a Secretary, and a maximum of three other members appointed by the Accounting officer one of whom shall be a lawyer. Section 45(2) of the regulations states “the Accounting Officer shall ensure that any appointment to the contracts committee is made from among serving Public Officers employed on a full time basis with the procuring and disposing entity or appropriate external body.
There was no evidence that the above provisions in the Act and regulations were complied with in the Mission either due to limited staff numbers or due to lack of balance of professional skills. There
454 was no lawyer on the committee as required by the 3rd Schedule of the Act even though the Mission has a lawyer attached to WTO but full time in the Mission.
Furthermore, the chairmanship of the contracts committee by the Head of Mission complicated matters more. Contract Committee is appointed by the Accounting Officer with the approval of Permanent Secretary/Secretary to the Treasury and the Committee reports to the Accounting Officer, who in this particular case is a First Secretary, many grades below the Head of Mission. This is irregular and it impairs the decision making of the Accounting Officer.
In his written reply the Accounting explained that given the numbers of staff at the mission at that time it was not possible to constitute a contracts committee in accordance with the requirements of the PPDA Act and regulations. He however, noted that with the improved staffing position of the mission it is now possible to constitute a new contracts committee in accordance with the law and regulations.
I urged the Accounting officer to expedite the process. b) “Off the street purchases”
Examination of accounts further revealed that the Mission was only purchasing “off the street” and attaching receipts as shown below
Furniture for the Conference CHF 4,446, Projector CHF 1,352, Bed, mattress CHF 1,364, cutlery, 2 Computers CHF 3,040 Configuration of IT security CHF 7,905.2 Photocopier/fax/printer/scanner CHF 12,300 Total CHF 30,407(US$24,530)
455 In his written reply the Accounting officer explained that Switzerland is a very complicated place, with three working languages whereby if one was to advertise, you would have to first translate into all the three languages which would be extremely expensive considering the meagre resource envelope for the Mission. It was for this reason that the mission’s contracts committee opted for the methods where they requested for quotations from various specialised firms and also visiting the main stores in some cases.
I advised management to always follow procurement regulations to ensure economy, efficiency and effectiveness and also to provide documentary evidence of evaluations carried out before the procurements were made.
79.5 Non-Tax Revenue (NTR) Collections
A total of Shs.56, 595,085 (CHF 38,850) was realised as collections of Non- Tax Revenue during the financial year. It was however, noted that there was no proof of remittance of funds and acknowledgement receipts from Treasury provided as evidence.
In his written reply, the Accounting Officer explained that the mission has always adhered to the regulations and transferred all NTR collections to the Consolidated Fund.
I advised the Accounting Officer to provide evidence of remittance of the funds and acknowledgement receipts from Treasury.
79.6 The Implementation of the Mission Charter
The Mission Charter for Geneva was issued on 23rd January 2006. It outlines specific tasks and activities, which shall be used in appraising the performance of the Head of Mission.
456 In his progress report on the implementation of the Geneva Mission Charter dated 06th December 2006, the Head of Mission reported generally that the Mission staff have participated in the meetings, deliberations and decisions of the UN and other International organisations based in Geneva. He stated that the Human Rights image has improved especially after presentations made by a Ugandan Minister of State to UNHCR. He further reported that Uganda’s image as a major tourist destination for the Swiss has also improved.
He however, noted that poor funding of the Mission has affected the implementation of the Charter and that for instance, Uganda is about to be suspended from the membership of the International Organisation for migration (IOM) because Uganda owes the organisation, Swiss Francs 214,049 accumulated during the last 15 years.
I was however noted that the Head of Mission’s report fell short of clarifying the level of implementation of the Charter. No progress and performance indicators (financial or non-financial) were given to provide an essential link between the Charter and the implementation of the Charter. For instance, if Uganda’s human rights image has improved, is there some form of new ranking the country can take advantage of? If Uganda is a new major tourist destination, how many more visitors have we received and what is the translation of their visits in terms of financial, economic or investment benefits? What is the new level of the Swiss foreign direct investment?
In his written reply the Accounting explained that the reporting mechanism has now been modelled around the ROM format that uses output, performance indicators and targets to assess performance of mission in a tabulated format. I await the outcome of the new reporting mechanism.
457 79.7 WTO Mission Internship
The World Trade Organisation (WTO) Secretariat maintains a limited internship programme in WTO Permanent Missions in Geneva for Postgraduate students wishing to gain practical experience and a deeper knowledge of the multilateral trading system. Opportunities are normally offered to the Ministry responsible for trade. The WTO Secretariat pays the intern a stipend of CHF 3,000 per month, a return economy ticket and the necessary visa assistance.
At the time of audit inspections, only 2 out of 3 interns had taken up the offer. One of the interns is a Senior Commercial Officer from Ministry of Tourism, Trade and Industry, the 2nd Officer is a Third Secretary from Ministry of Foreign Affairs. The third officer who did not report is also a Senior Commercial Officer from Ministry of Tourism, Trade and Industry.
The internship programme under review was running from 16th April 2007 to 12th October 2007. Since Government of Uganda’s input to the programme is basically providing the staff who wish to gain practical experience and deepen knowledge of the multilateral trading system, one would be interested in finding out why we did not take up all our slots, whether the programme is publicised at home and whether the criteria is fair to all.
The Accounting officer explained that the mission would continue to work hard to ensure that as many Ugandans benefit from the programmes in Geneva through taking up all slots.
I advised management to ensure that in future all slots allocated to Uganda are taken up, WTO programmes get enough publicity at home and the criteria for selecting participants is transparent.
458 80.0 PRETORIA MISSION
80.1 Excess Expenditure A total of Shs.183,705,644 was spent on goods and services in excess of the approved expenditure budget without seeking appropriate authority.
In his written response, the Accounting Officer attributed the excess expenditure on insufficient budgeting on some mandatory activities and the involvement of the mission in the CHOGM preparations.
I advised that the authority should be obtained to regularise this expenditure.
80.2 Incompletely Vouched Expenditure. Expenditure amounting to Ug.Shs.25,566,950 (R118,002.850) purportedly incurred on procurement of goods and services was found lacking appropriate supporting documentation. I could therefore, not confirm that the funds were put to proper use.
80.3 Non-Tax Revenue Collection
80.3.1 Visa fees
Audit inspection of the Pretoria Mission revealed that Visa fees were collected by administering Visa stamps rather than using the ‘standard charge’ Visa stickers. Also Registers of persons issued with visas were not properly maintained to enable reconciliation of visa fees collections against the register.
Further, it was noted that Visa fees banked or transferred to the Mission bank account by the applicants do not include bank charges which are charged by the bank on each transaction but instead the charge is met by the mission.
459 It was also noted that before Visas are issued proper verifications and reconciliations are not undertaken to ensure that the applicants have actually banked or transferred the money to the Mission Bank Account.
I advised that the mission consults with the Accountant General and Ministry of Internal Affairs on the treatment of bank charges.
80.3.2 Temporary Travel Documents Procedures governing issuance and Accounting for temporary travel documents using PS/1 application form were found inadequate in the following areas:-
• The Emergency Certificate Register lacked was sufficient details to differentiate Certificates paid for from those issued free to patients and deportees. As such, reconciliations could not be done to enable me establish actual collections from this source of revenue.
• Beneficiaries do not acknowledge receipt of issued Certificates by signing the register.
• Although copies (Photocopies) of Certificates issued, were required to be kept on file, quite a number of them were not kept while some were not properly filed.
Further to this, a physical stock count of PS/1 forms on hand revealed sequence gaps resulting in 199 forms being unaccounted for.
80.3.3 Passports Official government receipts were not written for fees collected from issue of new passports at the mission, making reconciliations of Revenue collected against passports issued difficult. I could therefore, not confirm the completeness of revenue collected from passport fees.
460 In his response, The Accounting Officer stated that this was a temporary situation pertaining at the time of audit and has been rectified.
80.4 Fixed Assets.
80.4.1 Buildings An inspection of the Building housing the Official residence which is housing the Ambassador revealed the following Matters:-
• Tiles and plaster had fallen off the walls of several rooms due to leakages.
• A Balcony floor was logged with rainwater that had failed to drain due to probably poor workmanship on the drainage system.
• Huge lateral roots of trees that were planted to beautify the compound had damaged pavers and remain a threat to the building itself.
I recommended that the old trees be removed and new ones replanted to maintain the original beauty of the compound.
I further, advised the Mission to undertake maintenance works to stop further damage to the already deteriorated property.
80.4.2 Other Assets An inspection of the embassy stores revealed that several pieces of House furniture and equipment were damaged as a result of poor stacking in store and reckless handling by staff.
In his response, the High commissioner stated that the mission does not have enough rooms for all the mission furniture and other properties. He suggested that Uganda Government should consider investing in
461 purchasing houses for Foreign Service Officers like most other Missions have done. This he said will reduce and/or eliminate breakages to properties as in some cases property is damaged when it is being shifted from rented houses by recalled officers.
I advised that the officers be held responsible for damage of government property.
80.5 VAT Refunds Whilst the mission is exempted from VAT payment by the host government, the system requires that exempted entities pay the tax and subsequent claim for refunds. By the time of inspection, there was no evidence that VAT refunds had been claimed by the mission.
In his written response, the Accounting Officer stated that the mission was in a process of claiming the refund. He explained that the system has been simplified because claims are now filed electronically to South African Revenue Services.
80.6 Accounts Staff The accounts department was found to be headed by a local staff in possession of Ordinary level elementary accounts certificate and lacking sufficient qualification, skill and experience to give competent technical advice on accounting matters. I asked the Accounting Officer to consult with the Accountant General to appoint competent personnel to man the Accounts Section.
The Accounting Officer stated that the matter had been discussed with the Office of the Accountant General.
462 81.0 KHARTOUM MISSION
81.1 Unauthorised Expenditure The mission incurred unauthorised expenditure of Shs.162,466,679 on various expenditure items without authority as shown below:
Item Budget Actual Variance Welfare 10,000,000 33,203,665 23,203,665 Printing stationery 10,000,000 24,125,115 14,125,115 and photocopy Telecommunications 10,000,000 25,857,921 15,857,921 Electricity 10,000,000 32,144,836 22,144,836 Water 8,000,000 12,004,326 4,004,326 Travel abroad 10,000,000 19,037,302 9,037,302 Fuel, Freight & 10,000,000 18,414,146 8,414,146 Transport Freight 17,596,800 17,596,800 Maintenance 9,000,000 15,922,430 6,922,430 Consumption of 41,160,138 41,160,138 plant & equipment Total 77,000,000 239,466,679 162,466,679
The Accounting Officer explained that the gross under funding of some expenditure items left him with no option but to re-allocate funds and that his request for virements was not responded to yet the need for expenditure in these areas remained critical to the operations of the mission.
I urged him to follow up his request for virements in order to regularise the expenditure.
81.2 NTR Collections
Examination of accounts further revealed that the mission collected Shs.47,696,090 from NTR. However, there were no remittance advice slips and acknowledgement receipts provided to confirm that the funds were actually remitted to the consolidated fund.
463 The Accounting Officer explained that all NTR collected was periodically remitted to Bank of Uganda and that the foreign exchange regulations in Sudan were changed during the year which affected the banking and transfer of foreign currency. I informed the Accounting Officer that proof of remittance of NTR could only be evidenced by way of acknowledgement receipts from Treasury.
81.3 Internal Controls
Generally the internal controls were not adequate with some payment vouchers lacking supporting documents and those that had were not translated although a translator is paid periodically. Besides, most payments were not initiated and approved by the relevant authorities as required by the TAI.
The Accounting Officer explained that owing to the unique nature of some categories of procurement of goods and services the guidelines laid down in the TAI are difficult to implement in their strict nature and that although the mission employs a translator he is preoccupied with translating official letters, newspaper articles, other correspondence and some information considered critical to the payment system.
I advised him to always abide by Government regulations and to ensure that all supporting documents for payments are translated to English.
82.0 KIGALI MISSION
82.1 Poor Book-keeping It was noted that the Mission did not maintain expenditure ledgers to ascertain how the details of the balances shown the Accounts were analysed and accumulated into the total yearly expenditure. In addition, no proper cash book for Non Tax Revenue was kept. For instance, receipts 464 issued for NTR collections WERE not recorded in the Cash book making reconciliations with the bank difficult.
82.2 Excess expenditure The mission spent a total of Shs.342,912,987= on goods/services consumed and property, plant and equipment in excess of the approved budget rendering the expenditure unauthorised.
82.3 Payables The payables balance of Shs.42,075,618= was not supported by the outstanding commitment list and other documentation. This limited the scope of my work.
82.4 Transfers received from other government units Shs.39,176,716= was reported as received from other government units. However, the mission did not provide the details which could enable me verify its source and the purpose for which the funds were received.
82.5 Unspent Salaries Examination of accounts revealed that one Embassy staff was transferred in April 2006 without a replacement but the Ministry continued to release to the Mission the salaries and allowances attached to that post. By the time of audit inspection, the remuneration had accumulated to US$56,086 which was being deposited on the Embassy’s development account.
Management, explained that the money was retained in anticipation of receiving a replacement. I informed the Accounting Officer that the money constitutes unspent salaries by which law should be remitted back to the consolidated fund.
465 82.6 Non Tax Revenue (i) Sale of temporary travel documents A total of Fr 910,000 was collected from the sale of temporary travel documents. However, only Fr 747,900 was remitted to Bank of Uganda, leaving a balance of Fr 162,100 (Approx. US $292) un- remitted (not banked). The Accounting Officer was advised to bank and transfer the balance to the consolidated funds.
(ii) Fees from sale of visa stickers During the financial year, the Embassy collected a total of US Dollars 8,740 from sale of visa stickers which were banked and subsequently remitted to Bank of Uganda. However, there was no evidence of receipt from the Accountant General to confirm that the funds reached the Consolidated Fund.
(iii) Sale of utility car The Embassy boarded off an old vehicle (Land-Rover 110 (CD15002R) formerly used as utility car at an amount of Fr 1,500,000 (US $2,727.2). Regulations require that such funds be receipted as NTR and remitted to the UCF. On the contrary, the funds were banked on the Embassy’s Development Fund Account. I advised the Accounting Officer to have these funds transferred to the Consolidated Fund Account.
82.7 Payment of Taxes – VAT The Embassy is exempted from paying local taxes including VAT. However, the arrangement is that the tax is paid first and a claim submitted to the tax authority for refunds by the Embassy. Although records show that several services were paid for from which VAT exemptions were applicable, management did not submit claims for VAT refunds to the Tax body.
466 The Accounting Officer admitted the anomaly and promised to follow up the matter with the tax body.
82.8 Contract for maintenance of Embassy website The Embassy contracted an individual to install and maintain the website for the Embassy. A monthly fee of US $700 (Fr 385,000) is paid to him for its maintenance. However, this arrangement is not supported by a contract agreement spelling out the terms and conditions of maintenance. This puts the Embassy at a great risk in case the vendor is not able to maintain the website to the satisfaction of the Embassy.
Similarly, no documentation is made by the vendor to prove work done which could assist management to keep truck of any changes.
I advised the Accounting Officer to draw a contract with the vendor and streamline his activities with the Embassy.
82.9 Tenancy Agreements A review of documents revealed that the tenancy agreement provide for a three months notice before either party could terminate the contract. The provision appears unfavourable for the Embassy and indeed it suffered a payment of Fr 1,650,000 for two extra months for a house formerly occupied by a Counsellor when his term was ended abruptly. The Accounting Officer in a preliminary discussion stated that he had taken steps to revise tenancy agreements to counter the provision for a reduction to one months notice.
I advised him to expedite the process and negotiate for terms that provide for unique circumstances where such expenditure could be avoided.
467 82.10 Other Assets/Inventories: The inventory at the Chancery; residence of the Ambassador and inventories in possession by other member of staff are not engraved/marked to distinguish them from privately owned property.
Besides, the inventory registers maintained by the Embassy are not updated regularly to reflect the true position of property owned at any one time by the Embassy.
The Accounting Officer was advised to have the inventory registers updated regularly. And also cause the assets to be engraved.
The stores ledger was also not properly kept. Although the ledger exists, purchases were not properly recorded to reflect quantities received, how they were issued out and the balances. Items purportedly received were haphazardly recorded, making verification of stores rather difficult.
82.11 Conversion of Fr to Dollars The Embassy management preferred to use the open market dealers for the conversion of currencies which purportedly offered better rates. It was however noted that the rates used in the conversion process were not disclosed to enable me ascertain the accuracy of funds in dollars on conversion and whether these funds were dealt with in accordance with the existing regulations.
82.12 Non maintenance of creditor’s ledgers The Embassy had running contracts with a number of service providers especially Landlords for Chancery and residential houses and security firms. Payment records indicated that the Embassy owed the Diocese of Kabagayi a total of US $68,000 in unpaid rent since 1999. However, no ledgers were maintained for the security service providers. Besides although the Embassy had substantially reduced this debt, the basis of payment was a 468 statement from the service provider rather than documents maintained by the Embassy.
I advised the Accounting Officer to open up ledgers for all service providers, and ensure that they are properly maintained.
82.13 Procurement Procedures (a) Lack of Proper Documentation:- PPDA procedures require that all procurements should be by issue of LPOs. Contrary to this all procurements of goods and services were not backed up by any LPOs. Similarly, deliveries were not witnessed and supported by delivery notes and goods received notes.
(b) Lack of Contracts Committee:- The Embassy does not have a contracts committee or PDU as required by the PPDA Act and regulations. Consequently all procurements of goods and services were not supported by contracts committee authority.
However, during discussion with the Accounting Officer, he explained that it was impossible for the Embassy to have the committee in place because of the staffing requirements for Contract Committee, which the mission cannot meet.
I advised him to liaise with PPDA, the Ministry of Foreign Affairs and Ministry of Finance, Planning and Economic Development to find a workable solution given the unique situation at the Embassy.
469 83.0 MOSCOW MISSION
83.1 Unauthorised Excess Expenditure According to the statement of Appropriation account (based on nature of expenditure for services voted) the mission incurred unauthorised excess expenditure of Shs.78,520,344 without authority as shown below:
Actual Budget Excess Expenditure Expenditure Goods and services 285,890,364 237,000,000 48,890,364 consumed. Consumption of 29,341,170 Nil 29,341,170 Property, Plant &Equipments (fixed assets) Social benefits 288,810 Nil 288,810 Total 78,520,344
Excess expenditure indicates a breakdown of controls over budgetary expenditure and undermines the rationale of budgeting.
I advised the Accounting officer that all mission operations should be budgeted for and approved by Parliament as required by the law. Where there is need for reallocation or virements, procedures should be followed. I recommend further that Government should make a comprehensive review of the Mission operations with a view of ensuring that it is facilitated adequately to pursue its objectives.
83.2 Circumvention of Public Procurement Regulations
Examination of accounts revealed that a total of Shs.318,246,480 was incurred on goods and services consumed. The following observations were made:
470 c) Absence of a Properly Constituted Contracts Committee
Whereas the PPDA Act Section 27-28 and the PPDA regulations Section 42-56 provide for contracts committees in procuring and Disposal entities, it was noted that the embassy does not have a properly constituted contracts committee as required by the law.
I advised the Accounting Officer to constitute a contracts committee as required by the PPDA Act and regulations or seek for alternative solution from the PPDA.
(b) Procurement of a utility vehicle It was further noted that the mission procured a second hand vehicle, Suzuki Grand Vitara from the embassy of Israel for US $15,000. However, the criteria used to select the supplier was not explained and there was no evidence that an evaluation committee was constituted. As pointed earlier, the composition of the contracts committee if any that deliberated on the procurement was irregular in itself.
In a related development, Treasury had released US$ 20,000 for the acquisition of a new vehicle but the mission opted for a used one which had cost the Israel embassy only US $ 15,730. I was not provided with satisfactory explanation why the mission opted for a used vehicle instead of a new one yet it had the funds.
During discussions the Accounting Officer explained that he opted for the second hand vehicle because of cost factors. I advised the Accounting that the budgeted funds should have been used for the intended purpose and that acquisition of a used vehicle needed approval of PS/ST. I recommend further that accountability for the balance of US $5,000 from the release be provided for audit.
471 83.3 Non-Tax Revenue (NTR) Collections
The Accounts show that a total of Shs.8,567,892 was realised from Non- Tax Revenue collections during the financial year. However, I was not provided with evidence of remittance of funds and acknowledgement receipts from Treasury.
I advised the Accounting Officer to provide evidence of remittance of the funds and acknowledgement receipts from Treasury.
83.4 Internal Control Weaknesses
A number of internal control weaknesses were noted which call for immediate remedial action. For instance during examination, it was found that most payments did not go through some of the procedures required by Government regulations such as initiation, authorization and approval. Some payment vouchers were not stamped “PAID” and some were effected in cash.
The danger of such control weaknesses is that irregular and double payments could easily result since the same documents could be presented for payment again.
I advised the management to improve on the control environment by ensuring that Treasury regulations and Instructions are strictly complied with.
83.5 Untransfered Balances
Examination of Accounts revealed there were balances on mission’s revenue and expenditure accounts totalling Shs.252,001,940 for the financial year 2005/2006. The following observations were made:
472 • I was not provided with an acknowledgement receipt from Treasury to confirm that the funds were actually returned to the consolidated fund as required by regulations.
• There was no entry made in the Statement of Changes in Equity for the amount transferred implying that the closing net worth was over stated.
• For financial year 2006/2007, there was also reasonably large balance of Shs.150,626,808(Shs.142, 058,916 on the expenditure account and Shs.8,567,892 on the revenue account). The existence of such big balances particularly on the expenditure accounts sends wrong signals that the mission actually receives more funds than what it requires and will make it difficult for the mission to justify its case for more funds to accomplish its objectives.
I advised the Accounting officer to transfer the funds immediately to the consolidated fund and to amend the accounts to reflect the true position of the closing net worth. I recommend further that the mission comes up with a detailed and costed work plan to justify the need for improved funding and ensures that all funds released are spent within the approved work plan.
83.6 Absence of Statement of Reconciliation between total Expenditure per Statement of Appropriation Account to total Expenditure in Statement of Financial performance
In the absence of the above statement there is unexplained discrepancies in the following items and figures in the Statement of Financial performance and Statement of Appropriation Account.
473 Actual Actual Budget Budget Item figures as figures as figures as figures as per per per per Statement Statement Statement Statement of Financial of of of performanc Appropriati Financial Appropriati e. on Account. performan on Account ce Employee 335,071,153 248,788,000 358,078,885 248,788,000 costs Goods and 213,745,053 213,400,000 223,719,381 213,400,000 services consumed. Consumptio 27,802,431 Nil 29,434,334 Nil n of property, plant & machinery
I advised the Accounting to reconcile the above figures and also prepare the reconciliation statement between the expenditure as per statement of Appropriation account and statement of financial performance.
83.7 The Implementation of the Mission Charter
The Mission Charter for Moscow Embassy was issued on 23rd Jan 2006 and outlines specific tasks, activities and performance outturns to be achieved which shall be used in appraising the performance of the Head of Mission In the Mission’s progressive report on the implementation of the charter for the period 2006/2007, the actual achievements in the areas of trade were reported as 500 tons of tobacco leaf exports to Russia (no value attached) and coffee exports to Belarus valued at US $85.000. The mission target was to increase exports to Russia to US $ 3m by 2008 from the current US $ 1,312,540 in key products like tobacco, coffee and flowers. I was not provided with sufficient information to enable me verify how the current exports were arrived at and if correct, where and how the target would be achieved with the figures given.
474 Further the Investments from Russia to Uganda were targeted to increase from US $ 2,657,000 to US $4m in the areas of cotton ginning, citrus processing and assistance to Busitema Agricultural College (Now Busitema University). The actual achievements reported here include construction of a ginning factory in Kibuku County in Pallisa district and registration of a cotton club company in Uganda. The report estimates that the amount invested is approximately US $ 4m. As mentioned earlier, i could not independently verify the figures due to lack of sufficient information.
Finally Technical assistance from Russia reported in the areas of human medicine (six doctors attached to Mulago Hospital), in the military field (like 27 UPDF officers trained in tank mechanics and other 5 in MIG manoeuvres) and 19 Russian tourist groups were reported to have visited Uganda during the period.
It’s clearly evident that the mission charter is yet to be fully implemented and the performance indicators reported still fall short of the targets. Inadequate funding to the mission could be a contributory factor and stiff competition from the traditional Russian destinations like Seychelles, the far East, Kenya etc could be the other factor.
I advised management to lobby the relevant authorities in Kampala to obtain the required funding in order to enable the mission/embassy cover all the countries under it’s jurisdiction which include Russian Federation, Ukraine, Republic of Belarus, Khazakhstan, Almenia, Republic of Kurguzstan, Georgia, Republic of Azerbaijan, Turkmerustan, Tajikistan, Uzbekistan.
83.8 Staffing Matters The mission was re-opened in August 2003 by one staff after the June 2000 closure. Its charter mandates the embassy to cover Moscow, Ukraine, Belarus and the Commonwealth countries of independent states. Moscow 475 alone is a big city and Russia is a huge country with good prospects for trade and investment. Surprisingly there was only 2 home-based staff, the Ambassador and First secretary/Accounting Officer. The number of local staff was also not sufficient. During the time of inspection it was noted that the Accounts Assistant was also the Driver for the pool vehicle.
In a related development the salaries paid to local staff are so low that attracting and retention is difficult given the costs of living in Moscow and the local labour laws. For instance a housekeeper is paid as low as US $250 p.m, an office attendant US $360 p.m and a long serving secretary US $ 500 p.m.
I advised management to liaise with the relevant authorities in Kampala to improve on the staffing levels of the mission. I recommend further that the terms of service for local staff be improved to enable the mission attract high calibre and quality staff to improve service delivery.
83.9 Rent Examination of accounts revealed that whereas the mission’s quarterly release from the Treasury for rent is about US $21,408.90 the actual total quarterly rent required is US $ 24,725.94 resulting into a quarterly shortage of about US $3317.04(equivalent to US$ 13,268.16 annually). It was further noted that by the time of closure of the embassy in 2000, records show that the rent arrears was US $ 237,595 and the Russian Government was reluctant to provide premises due to the unpaid rent at the time. Although the rent arrears were later paid in full, a situation that leads to accumulation of rent should not be allowed to re-occur.
I advised the Accounting Officer to liaise with the Permanent Secretary/ Secretary to the Treasury to ensure that rent due is fully paid for using rent releases other than diverting funds from other sources.
476 83.10 Recall of an Officer An officer at the Embassy ended his tour of duty and was recalled in June 2007. The costs of his recall were met by the Embassy instead of the Ministry of Foreign affairs, which is responsible for such an activity. Consequently an amount of US $15,353.84 was paid to a shipping company for transporting the personal effects of the said officer. Similarly the air tickets for both the departing and incoming officers were also paid for by the embassy. I have reported on this matter previously about similar practices in other Embassies but the ministry has persistently directed embassies to divert funds meant for other programmes to meet costs of recall even when re-location of staff is clearly the mandate of the ministry and is budgeted for.
I recommend that the Ministry of Foreign Affairs should manage the deployment of staff within its budget and Accounting Officers in the embassies abroad should not be directed to meet costs outside their budgets.
84.0 BERLIN MISSION
84.1 Non Tax Revenue collections.
A review of the accounts revealed that the mission realised a total of Shs.179,490,968 from Non Tax Revenue and transferred Shs.145,689,677 to Treasury.
However, the documents in form of remittances advice slips and acknowledgement receipts from Treasury were not availed for verification to confirm that the funds were actually remitted to the Consolidated Fund.
477 Non Tax Revenue returns for the period July-September 2006 were also not submitted for audit. Consequently, I could not reliably ascertain the accuracy of total collections reported in the accounts.
84.2 Unauthorised expenditure
According to Statement of Appropriation Account (Based on nature of expenditure for services voted) the mission incurred unauthorised excess expenditure of Shs.23,682,255 on consumption of property, plant & equipment.
I advised the Accounting officer to request for a retrospective authority to regularise the expenditure.
84.3 Internal Controls Generally, the internal controls were inadequate. For instance, most payments lacked supporting documents like requisitions, loose minutes, invoices and acknowledgement receipts. The RBC returns were either submitted late or in some cases like for the period July-September 2006, they were not submitted for audit.
I urged the Accounting officer to improve on the control environment, as weak controls pose a high risk to management in its responsibility of managing Public Funds adequately.
84.4 Unspent Balances.
Examination of Accounts revealed there were unpent balances from the previous year on three (3) mission bank accounts totalling Shs.143,787,961 for the financial year 2005/2006.
However, I was not provided with evidence that the funds were actually remitted back to the Consolidated Fund as required by the law.
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I advised the Accounting officer to transfer the unspent funds promptly to the Consolidated Fund and disclose in the accounts accordingly.
85.0 PARIS MISSION
85.1 Excess Expenditure Expenditure incurred in excess of the approved budgetary provisions totalled Shs.159, 321,101 affecting the following budget items: - Actual Budget Variance (Excess Expenditure) Employee Costs 930,300,930 919,458,296 10,842,634 Goods and Services 645,471,144 628,046,156 17,424,988 Consumption of Property, Plant & Equipment 131,053,479 - 131,053,479 Total 159,321,101
This expenditure is extra budgetary and is an indication of breakdown of controls over budgetary expenditure.
In her explanation the accounting officer attributed the over expenditure to poor funding of the Mission by the Treasury which forces the Mission to utilise Non-Tax Revenue to fund critical activities of the Mission.
The excess expenditure needs to be regularised by way of supplementary appropriation. Management should initiate the process accordingly.
There is need for government to make a comprehensive review of the Mission needs and budget for them accordingly.
479 85.2 Irregular Payment of Salaries and Wages Examination of accounts revealed that three embassy staffs were paid salaries and allowances US$ 82,692 over and above the entitlements stipulated in the Foreign Service Standing Orders ( Group 3).
It was explained by the accounting officer that it was management decision to apply higher rates owing to the high cost of living in Paris and she had written to the responsible ministries seeking for clearance. I await the outcome.
85.3 Mission Properties (a) Title Deeds The Mission owns a building located at 13th Avenue Raymond Poncaire in Paris which is used as the Chancery building. However, the title deed could not be traced at the Embassy. Without a title deed the rights of ownership of the property can be challenged.
In her response, the accounting officer stated that she had initiated inquiries with the relevant authorities. I await the outcome of the process.
(b) State of the Property Following the closure of the Mission, the property suffered extensive deterioration due to lack of regular maintenance.
Efforts have since been made to renovate it using proceeds from Non-Tax Revenue. However, a lot still has to be done to fully renovate the building and make it reflect the status of a chancery building. The lift is too old to be used and poses a risk both to the users of the building and the neighbourhood. The fourth floor of the building is not in use due to dilapidation. It has glassy roofing supported by rusty joints which may require replacement. Its 480 windows and floor also require redoing, painting and polishing. This floor, if renovated has the potential to generate a lot of revenue for the Mission.
In her written response, the accounting officer indicated that they were committed to the renovation works and considering sourcing funds from financial institutions.
There is need for the Mission to be availed with the required funds to fully renovate the building. The Ministry could also consider the financing proposal put forward by the Mission in which the Mission would negotiate a loan (€350,000) with one of the bankers to finance the complete renovation of the building and make it more attractive for rental purposes. (c) Tenancy for Embassy of the Republic of Tanzania The Embassy entered into a rental agreement with the Embassy of the Republic Tanzania in 1995 for the rental of office space until October2004. In September 2004 the lease agreement was renewed for a further period of three years expiring on 30th October 2007 at a monthly rental of €6,152 and an additional charge of €600 to cover utilities and garbage collection. The lease agreement provided that major renovations were soon to be carried out on the building but once completed the rental would be reviewed. This would allow the mission earn economic rates from the tenancy.
It was however noted that the rental has never been revised despite renovations were done on the property.
There is need to renegotiate the lease agreement so that the Mission can earn economic rates.
481 85.4 Design of Mission Website The Mission contracted a company to design a website and provide technical support service and training for site maintenance at a cost of €3,300. It was however noted that the award did not follow the recommended procurement procedures. Instead the decision to contract was made by the Head of the Mission when she met the CEO of that company while attending a Conference in Uganda. This practice does not only contravene the regulations but it denies the government of a chance to source for alternative cheaper and better service providers.
There is also no evidence to show that the company completed the work by March 15th as per contract terms. Further more an extra €1,000 was paid to the firm in excess of the contract price.
Procurement regulations should always be adhered to by the Mission. Meanwhile the €1,000 should be explained.
85.5 Local Staff Appointments A review of local contract and non contract staff files revealed that some staff files lacked appointment letters. There was also no evidence of probationary appointment for some staff contrary to the existing recruitment procedures for local staff. Records also showed that although many of the local staff had just been reappointed, the Head of Mission had issued an instruction to have their appointments rescinded for reasons which are yet to be explained. This is likely to lead to staff demotivation if not handled properly.
Such cancellation of employment appointments or contracts has legal implications which can sometimes lead to nugatory expenditure.
Management should have also staff files updated. There is also need to ensure that the recruitment procedures are strictly complied with. 482 86.0 TEHRAN MISSION
86.1 Unauthorised excess expenditure
A review of the statements of appropriation accounts and cash flow statement revealed that the mission incurred unauthorised expenditure of Shs.114,430,637 on various expenditure items without authority as shown below: Item Budget Actual Variance Employee Costs 248,788,000 335,071,153 86,283,153 Goods & Services 213,400,000 213,745,053 345,053 Consumed
Consumption of property, Nil 27,802,431 27,802,431 plant and equipment. Total 114,430,637
The actual expenditure is reflected in the Statements of Appropriation.
I advised the Accounting officer to have the expenditure regularised in accordance with the regulations.
86.2 NTR collections
Examination of accounts further revealed that the mission collected Shs.8,887,364 from NTR. However, there were no remittance advice slips and acknowledgement receipts provided from Treasury to confirm that the funds were actually remitted to the consolidated fund.
The Accounting Officer explained that all NTR collected was remitted to the consolidated fund on two occasions. I informed the Accounting officer that proof of remittance of NTR could only be evidenced by way of acknowledgement receipts from Treasury.
483 86.3 General Observations
The following observations were made which merit mention:
Contrary to regulations officers at the mission claim both climatic and warm clothing allowance. It should be noted that warm clothing is for only civil servants (other than Foreign Service Officers) on training or duty outside the country for a limited period of time.
The Accounting Officer explained that posting letters from the parent Ministry for all Foreign Service officers state clearly that the officers are entitled to both climatic and warm clothing allowances. I advised the Accounting officer that Foreign Service officers are only entitled to climatic allowance on posting but not both and that recovery measures should be initiated for the irregular payments made.
Procurements are not handled transparently as per regulations. There was no evidence of minutes of the contracts committee meetings to confirm whether they handled all the procurements in a prescribed manner. Instead procurements like computers worth Rials 22,840,000 (approx US$2,460) laptop R28,260,000 (US$3,059), furniture for R33,300,000 (US $3,604 and cutlery and utensils worth Rials 19,300,000 (US $2,079) were purchased off the street on the recommendation of one officer. It was also noted that the Mission does not prepare a procurement plan as required by the law.
In a related development all the above procurements were made without procurement Plan.
The Accounting officer explained that it was an oversight to exclude the contracts committee minutes in the expenditure returns and the mission also had a procurement plan. I urged the Accounting officer to provide the documents for review.
484 87.0 CANBERRA MISSION
87.1 Unauthorised Expenditure
The mission incurred unauthorised expenditure of Shs.134,853,103 without authority as shown below:
Item Actual Budget Variance FSA 267,050,439 257,763,000 9,287,439 Welfare & 10,853,288 10,000,000 853,288 Entertainment Telecommunications 27,821,164 10,000,000 17,821,164 Rent produced 216,807,245 190,000,000 26,807,245 properties Electricity 15,183,531 10,000,000 5,183,531 Travel inland 41,920,499 8,000,000 33,920,499 Travel abroad 50,804,481 10,000,000 40,804,481 Fuels, oils, & 8,175,456 8,000,000 175,456 lubricants Total 638,616,103 503,763,000 134,853,103
I advised the Accounting Officer to have the excess expenditure regularised in accordance with the regulations.
87.2 NTR Collections
According to the accounts the mission realised a total of Shs.189,523,021 from NTR collections. The following matters were noted:- • Remittances Un-receipted Treasury has so far only acknowledged the receipt of Shs.97,069,294. The balance of Shs.92,453,727 remains unaccounted for.
I advised the Accounting officer to provide acknowledgement receipts from Treasury as evidence of remittance of the entire amount collected.
485 • Non Submission of NTR Returns
The Mission never submitted NTR Returns for the entire financial year contrary to regulations. I was therefore unable to confirm whether the NTR reported in the accounts was properly stated.
I advised the Accounting officer that all revenue returns with detailed information as required by government regulations should be written and submitted for audit.
Revenue collections Whereas the mission’s reported NTR in the accounts was Shs.189,523,021 (Aus$132,450), a review of the available documents revealed that total banking on NTR account for the period amounted to Shs.203,402,774 (Aus$142,150) causing an over banking of Shs.13,879,753 (Aus 9,700) whose source was not explained.
I advised the Accounting officer to reconcile the collections for the period with the bankings made and the performance of the previous year.
87.3 Internal Controls
Generally the internal controls were poor as shown below:
(i) Unauthorized Reallocation of Funds
A total of AUS $ 7611.44 was paid to Ms Esanda Finance in respect of eight (8) instalments (@ $951.43) for Utility Car Hire Purchase for the Mission. This being a capital asset, funds should have been budgeted and sourced for under the capital budget. Instead recurrent funds were used to purchase the vehicle. This unauthorized reallocation of funds not only depletes funds for other activities for which funds were budgeted but also distorts budgetary control mechanisms.
486 During inspection the Accounting Officer accepted the anomaly and stated that this was so because the Mission has never been allocated capital development funds. She further stated that she is currently charging the expense on the transport item.
I advised the Accounting officer to continue lobbying the relevant authorities for capital development budget to enable spending according to the set laws and regulations.
(ii) Personnel Records Most of the personnel files were incomplete to facilitate a through review of the records.
During discussions the Accounting Officer stated that the Mission is new, and was in the process of opening up all books and records of the Mission. I urged the Accounting officer to expedite the process.
(iii) Use of Telephone
It was further noted that the Mission on average pays AUS $ 1000 monthly in respect of telephone expenses for the Chancery. However, there was no telephone register in place at the Mission to enable verification of usage of telephones. It is also not clear whether private calls are not included in the bills.
I advised the Accounting Officer to ensure that a register is opened and maintained.
(iv) Record Keeping
Although there was marked improvement in the record keeping as compared to the last audit inspection in September 2006 the following matters were noted;
487 (a) Books of Accounts
The mission maintains a vote control register according to the commitment control system, however there are no abstracts and ledgers being maintained. This made the verification of final accounts difficult.
I advised the Accounting officer to immediately open up the accounting records to facilitate the compilation of final accounts in a systematic manner.
I recommend further that Treasury should consider authorising the purchase of accounting software for all Missions to enable faster, easier and more accurate system of compilation of accounts.
(b) Visa Returns
Examination further, revealed that records of visa stickers are not being maintained and submitted for audit regularly. At the time of inspection an attempt was being made to have a counterfoil register opened.
I recommend that visa stickers be accounted for and submitted in the monthly returns just like the expenditure returns. There is also need for visa usage to be reflected in the visa register and the ledger folio records properly maintained to enable tracking of the visa books and stickers in stock, used and cash collected.
(v) Asset Management
(a) Record keeping
Examination and inspection both revealed that furniture and equipment bought by the Mission since its inception, were not recorded in an inventory book / asset register as required by regulations. 488
(b) Assets that do not belong to the Mission
It was further noted that the Mission is functioning using furniture purchased by the Ambassador using his personal funds. This furniture includes desks and chairs and constitute a bigger proportion of all furniture used at the Mission. These assets are also not recorded in the inventory register.
I advised management on the need to immediately have a record of the assets purchased recorded in the Mission books. I further recommend that the assets of the Ambassador be properly recorded and modalities be initiated by the Accounting Officer to have the furniture purchased and recognized as Mission furniture.
87.4 Nugatory Expenditure Examination of accounts revealed that the mission incurred a total of Shs.28,943,233 (US$16,538.99) on transportation of an officer’s personal effects from Canberra to Kampala. Out of the above amount, Shs.4,837,210 (US$.2,764.12) was for demurrage charges. This expenditure is considered nugatory as it could have been avoided had the concerned officers acted responsibly.
It was further noted that in the Permanent Secretary/Secretary to the Treasury’s letter authorizing usage of Visa money, the Accounting Officer was advised to seek for supplementary expenditure to cover the expense according to set laws. The request for supplementary as advised was not sought, thereby causing an over expenditure.
I advised the Accounting officer to always avoid wastage. I recommend further that a request for a supplementary be made to the PS/ST to avoid excess expenditure.
489 87.5 Computational and clerical errors in the accounts The following errors were noted in the accounts:-
a) Statement of Financial Performance
Transfers received from Treasury were recorded as 695,532,554 in the accounts. However, a schedule of releases from Treasury for the period revealed that the figure was actually Shs.698,510,000. There is need to reconcile the two figures to ensure accurate disclosure.
b) Statement of Reconciliation of Total Expenditure on The Statement of Financial Performance And Statements of Appropriation.
The figure for the total expenditure from the statements of appropriation to be transferred for the reconciliation is Shs.775,382,813 and not Shs.778,040,276, while the figure to be reconciled from the statement of financial performance is Shs.936,885,256 and not 935,885,256. There is need to reconstruct the statement.
c) Statement of Stores and other Assets
Whereas there is no figure posted for stores and other assets acquired during the year, it was noted from examination of vouchers that various equipment and furniture were acquired during the year, for instance a photocopier, 2 computers, furniture and equipment. All these should have been recorded in the statement to ensure completeness. There is also need for adequate disclosure as to the source of the funding for the purchases made since no capital development funds were released to the Mission.
I advised the Accounting Officer that all the above errors in the financial statements be explained.
490 87.6 Salary Payment Examination of accounts revealed that the salary being paid to the Ambassador of US 2,227 is above the approved rate. The highest salary being earned by officials at his rank is US$1,696. This payment calls for an explanation and proper authorisation.
During the inspection it was discovered that the correspondence detailing the entitlements of the Ambassador from Ministry of Foreign affairs Kampala indicated that HE was to receive US$2,227. However, the correspondence did not indicate the source of authority for the pay.
I urged the Accounting Officer to provide further information on the emoluments and their regularity and evidence that Public Service duly authorized
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