Office of the Auditor General the Republic of Uganda

OFFICE OF THE AUDITOR GENERAL

THE REPUBLIC OF UGANDA

REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF

TORORO DISTRICT LOCAL GOVERNMENT

FOR THE YEAR ENDED 30TH JUNE 2018

OFFICE OF THE AUDITOR GENERAL UGANDA

Table of Contents

Key Audit Matters ...... 1 a) Central Youth Band Brigade ...... 3 b) Senior Quarters Youth Movie Industry ...... 4 i. Routine manual maintenance/ Mechanised...... 5 ii. Periodic maintenance ...... 6 Other Matter ...... 6 Other Information ...... 8 Management Responsibilities for the Financial Statements ...... 8 Auditor General’s Responsibilities for the audit of the Financial Statements ...... 8 Other Reporting Responsibilities ...... 10 Report on the Audit of Compliance with Legislation ...... 10 APPENDICES ...... 18 Appendix 1: Noncompliance with the repayment schedule ...... 18 Appendix 2: Road Fund performance ...... 20 Appendix 3: Status of Medical equipment ...... 21 Appendix 4: revenue accountability and contracts ...... 22

LIST OF ACRONYMS GOU Government of Uganda IESBA International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants INTOSAI International Organization of Supreme Audit Institutions ISSA International Standards on Auditing MoGLSD Ministry of Gender, Labour and Social Development YLP Youth Livelihood Programme YIG Youth Interest Group PFMA Public Finance Management Act, 2015 TAI Treasury Accounting Instructions UGX Uganda Shillings LGFAR Local Government Financial and Accounting regulations F/Y Financial Year NEA National Environment Act NAA National Audit Act UWEP Uganda Women Entrepreneurship Program ULA Uganda Land Act LGA Local Government Act

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REPORT OF THE AUDITOR GENERAL ON THE AUDIT OF FINANCIAL STATEMENTS OF TORORO DISTRICT LOCAL GOVERNMENT FOR THE YEAR ENDED 30TH JUNE, 2018

THE RT. HON. SPEAKER OF PARLIAMENT Opinion I have audited the accompanying financial statements of Tororo District Local Government which comprise the Statement of Financial Position as at 30th June 2018, and the Statement of Financial Performance, Statement of Changes in Equity and Statement of Cash Flows together with other accompanying statements for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.

In my opinion, the financial statements of Tororo District Local Government for the year ended 30th June 2018 are prepared, in all material respects, in accordance with section 51 of the Public Finance Management, 2015 and the Local Government Financial and Accounting Manual, 2007.

Basis for Opinion

I conducted my audit in accordance with International Standards of Supreme Audit Institutions (ISSAIs). My responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of my report. I am independent of the District in accordance with the Constitution of the Republic of Uganda (1995) as amended, the National Audit Act, 2008, the International Organization of Supreme Audit Institutions (INTOSAI) Code of Ethics, the International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants (Parts A and B) (IESBA Code), and other independence requirements applicable to performing audits of Financial Statements in Uganda. I have fulfilled my other ethical responsibilities in accordance with the IESBA Code, and in accordance with other ethical requirements applicable to performing audits in Uganda. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

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

I have determined the matters described below as the key audit matters to be communicated in my report.

1.0 Performance of Youth Livelihood Programme The Youth Livelihood Programme (YLP) is a Government Programme being implemented under the Ministry of Gender, Labour and Social Development (MoGLSD). The programme, which started in the financial year 2013-2014, was to respond to the existing challenge of unemployment among the Youths.

The programme, which is implemented through the District provides support to the vulnerable youth in form of revolving funds for skills development projects and income generating activities initiated by youth groups.

The audit focused on an amount of UGX.628,596,323 disbursed to the District in the Financial Year 2014/2015 whose recovery period of three years had expired by 30th June 2018. The audit procedures performed focused on ascertaining the following;

 Whether all funds budgeted for YLP during the period under review were actually released and used only for the programme.  Whether all funds advanced to the youth groups were repaid in accordance with the agreed repayment schedule and to establish reasons for failure or delays to repay the funds.  Whether all funds recovered during the period under review were transferred to the revolving fund account in Bank of Uganda to be disbursed to other Youth Livelihood Groups (YLGs) in accordance with the revolving funding model and;  Whether on a sample basis the funded projects do exist and are operating.

I made the following observations;

1.1 Funding of the Programme A review of the approved budget for the YLP programme revealed that the District had budgeted for a total amount of UGX.628,596,323 for the financial year 2014/2015 and all the budgeted funds were released. A total of 76 youth interest groups were funded.

1.2 Noncompliance with the repayment schedule It was observed that whereas the groups funded in 2014/2015 were expected to have repaid a total amount of UGX.628,596,323 (Interest inclusive) by close of the financial year 2017/2018, only UGX.122,049,780 was collected leaving a balance of UGX.506,546,543 (81%) outstanding as shown in appendix 1. This was attributed to various factors including disintegration of group members. Failure to repay in a timely manner implies that other eligible groups were unable to access the funds since this is a revolving fund.

The Accounting Officer attributed poor recovery to political interference and the misinterpretation by many youth that it was free money given to them. However, management has put measures in place to improve the situation.

I advised the Accounting Officer to ensure that all outstanding amounts are repaid.

1.3 Transfer recovered funds to the recovery account in BOU. A review of the bank statements of YLP collection accounts revealed that the collected amount of UGX.122,049,780 had been transferred to the National Revolving Fund Collection Account by the end of the financial year 2017/18. The timely transfer collected funds to the recovery account was attributed to adherence to guidelines. This enhances the effective implementation of the program.

I advised the Accounting Officer to continue with the timely transfer of recovered funds to the designated account.

1.4 Inspection of YLP projects Physical inspection was carried out on two (2) selected projects namely; Central Youth Band Brigade and Senior Quarters Youth Movie Industry (2014/15) to ascertain whether they were in existence and executed in accordance with the operational guidelines. The following observations were made:

a) Central Youth Band Brigade An amount of UGX.12,500,000 was disbursed to the group in the financial year 2014/2015 and no recovery had been made implying a 100% default rate. Physical inspection revealed that equipments were bought and the business is operational. However, the members of the group disintegrated and left the Chairman alone.

The Accounting Officer explained that the matter is under investigation by Police. I advised the Accounting Officer to peruse the matter to its conclusion and have the recoveries made.

b) Senior Quarters Youth Movie Industry An amount of UGX.12,500,000 was disbursed to the group in the financial year 2014/2015 and no recovery had been made implying a 100% default rate. Inspection revealed that the group disintegrated. The members of the group changed their contacts.

The Accounting Officer promised to engage law enforcements to enhance recovery from the group.

The Accounting Officer is advised to peruse the matter to its conclusion.

2.0 Implementation of the Uganda Road Funds Section 45 (3) of the Public Finance Management Act, 2015 states that “An Accounting Officer shall enter into an annual budget performance contract with the Secretary to the Treasury which shall bind the Accounting Officer to deliver on the activities in the work plan of the vote for a Financial year, submitted under section 13 (15) of the said Act”.

Regulation 18(3) of the Local Governments Financial and Accounting Regulations, 2007 requires budget estimates to be based on objectives to be achieved for the financial year and during implementation, effort to be made to achieve the agreed objectives or targets as per the programme of Council. It has been observed over years that planned and budgeted for activities of a number of Local Governments are not implemented thereby affecting service delivery.

During the overall office wide planning, I identified risks such as inadequate release of funds and failure to undertake budget monitoring and supervision that are likely to be the causes of failure to implement the planned activities under Uganda Road Fund. The focus was put on the planned major outputs under Uganda Road Fund which greatly impact on service delivery in the Local Governments.

Consequently, I developed specific audit procedures which included ascertaining whether;

 The budgeted URF releases for Local Governments for the year under review were actually received ;  The planned URF outputs were achieved;  The monitoring and supervision was carried out by reviewing reports to assess performance.

Based on the procedures performed, the following observations were made; A total of UGX.684,351,000 was budgeted to cater for routine manual maintenance, routine mechanised maintenance, periodic maintenance and emergency activities on several District roads using Road gangs and the force Account mechanism. However, the district received UGX.681,967,046 resulting into a deficit of UGX.2,383,954. The deficit constituted 0.3% of the budgeted amount. Management attributed this to budget cuts from Uganda Road Fund that is beyond the district’s control.

I advised the Accounting Officer to always follow-up on the budget shortfall from the respecting funding agencies.

2.1 Status of implementation A review of planned outputs against actual performance revealed that planned outputs were not achieved as planned as shown in appendix 2.

i. Routine manual maintenance/ Mechanised A total of 103.5 kms at an estimated cost of UGX.75,037,500 was planned to be undertaken as shown in appendix 2. However, audit revealed that 126.7kms (122%) were actually undertaken at a cost of UGX.119,639,210 (159%) leading to excess expenditure UGX.44,601,710 on unplanned 23.2Kms.

Inspection of Achilet-C-Maguria, a 4km road revealed that an amount of UGX.4,836,000 was incurred on the road. However, it was observed that culverts were disjointed, blocked and exposed to the top surface of the road which may lead to damage being inflicted on them by heavy vehicles. Further, the road is cut off for vehicles at 3.5Kms as shown below;

The Accounting Officer attributed the poor condition of the road to natural factors like heavy rains and the broken parts were beyond the scope of the works. He nevertheless, promised to prioritise them in the subsequent financial year.

The Accounting Officer is advised to ensure that effective supervision of the road works and to address the defects.

ii. Periodic maintenance A total of 16.5 kms at an estimated cost of UGX.184,500,000 was planned to be undertaken as shown in Appendix 2. However, audit revealed that 13.3 kms were actually undertaken at a cost of UGX.150,080,345 leading to an unspent amount of UGX.34,419,655 and uncompleted works of 3.2Kms. Incomplete works expose the roads to further deterioration.

I advised the Accounting Officer to ensure the planned works are rolled over to the next financial year.

Other Matter In addition to the matter raised above, I consider it necessary to communicate the following matter other than those presented or disclosed in the financial statements.

3.0 Transfers of UWEP funds to MoGLSD On 9th May 2018 UGX.134,860,000 was transferred to the District account as UWEP funds. However it was observed that these funds were recalled by MoGLSD and transferred to the BOU Account No.000180088000038. There was no accountability receipt or acknowledgement from BOU/MoGLSD to confirm receipt.

The Accounting Officer attributed the shortcoming to Ministry of Gender, Labour and Social Development; who erroneously transferred UGX.67,430,000 twice on the same day to the District account. He promised to ensure that relevant accountabilities and acknowledgement receipts are obtained.

I advised the Accounting Officer to follow up and obtain accountabilities of the said funds.

4.0 Failure of council to sit in the whole financial Year Section 9 (1) of the third schedule of LGA requires local government council shall meet for the discharge of its functions at least once in two months, at a time and place that the speaker or chairperson in the case of a council without a speaker may

determine. Sections 96 and 97 of the same Act include but are not limited to defending the constitution, coordination of education, health, water, road safety and promoting council decency as the council’s main role. However, there was no evidence that the council held any council and committee meetings.

The Accounting Officer attributed the matter to conflicts and differences among political leaders.

Consequently, all council functions were not performed during the year. This adversely affected governance and oversight roles of all the organs of council.

However, council sittings have since resumed with two council meetings so far held since the beginning of the current financial year 2018/2019.

The Accounting Officer is advised to engage responsible ministries for mediation with councillors to have harmonized position for the future of the district council.

5.0 Non-operational district service commission Section 54 (4) of the LGA, requires that the district service commission shall in relation to its functions spelt out in sub-section (1) act only upon the request and submission of the relevant council of which section (7) of the same Act requires that Two-thirds of the members of the district service commission or its specialized committees shall form a quorum at any of its meetings.

It was noted that there was no council in place on which submissions would originate and also the quorum of the commission was not in place to deliberate.

It was observed that over ten (10) people left the district on retirement, transfer and death. However, replacements could not be effected due to lack of the District Service Commission. This affected operations and service delivery in the most key areas of education, health, natural resources and works.

Management attributed this to lack of quorum in the district service commission and political differences citing security threats to the council sitting which hindered approval of district service commission members.

I advised the Accounting Officer to continue engaging councillors and the Ministry of Local Government to have the council meetings and committees approved.

Other Information

The Accounting Officer is responsible for the other information. The other information comprises the statement of responsibilities of the Accounting Officer and the commentaries by the Head of Accounts and the Accounting Officer, and other supplementary information. The other information does not include the financial statements and my auditors’ report thereon. My opinion on the financial statements does not cover the other information and I do not express an audit opinion or any form of assurance conclusion thereon.

In connection with my audit of the financial statements, my responsibility is to read the other information and, in doing so, consider whether the other information is materially consistent with the financial statements or my knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work I have performed, I conclude that there is a material misstatement of this other information; I am required to report that fact. I have nothing to report in this regard.

Management Responsibilities for the Financial Statements Under Article 164 of the Constitution of the Republic of Uganda, 1995 (as amended) and Section 45 of the Public Finance Management Act, 2015, the Accounting Officer is accountable to Parliament for the funds and resources of Tororo District Local Government.

The Accounting Officer is also responsible for the preparation of financial statements in accordance with the requirements of the Local Governments Financial and Accounting Manual, 2007 and the Public Finance Management Act 2015 and for such internal control as management determines necessary to enable the preparation of financial statements that are free from material misstatement whether due to fraud or error. In preparing the financial statements, the Accounting Officer is responsible for assessing the District’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting, unless the unless the Accounting Officer has a realistic alternative to the contrary.

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

Auditor General’s Responsibilities for the audit of the Financial Statements My objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISSAIs will always detect

8 a material misstatement, when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users, taken on the basis of these financial statements.

As part of an audit in accordance with ISSAIs, I exercise professional judgement and maintain professional scepticism throughout the audit. I also:-  Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.  Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control.  Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the management.  Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in my auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my auditor’s report. However, future events or conditions may cause the entity to cease to continue as a going concern.  Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

I communicate with the Accounting Officer regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit.

I also provide the Accounting Officer with a statement that I have complied with relevant ethical requirements regarding independence, and to communicate with them all

9 relationships and other matters that may reasonably be thought to bear on my independence, and where applicable, related safeguards.

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

Other Reporting Responsibilities

In accordance with Section 19 (1) of the National Audit Act, 2008, I report to you, based on my work described on the audit of Financial Statements, that; except for the matters raised in compliance with legislation section below, and whose effect has been considered in forming my opinion on financial statements, the activities, financial transactions and information reflected in the financial statements that have come to my notice during the audit, are in all material respects, in compliance with the authorities which govern them.

Report on the Audit of Compliance with Legislation The material findings in respect of the compliance criteria for the applicable subject matters are as follows;

6.0 Natural resources 6.1 Lack of Local Environment Committees Section 14 of the National Environment Act Cap153 requires appointment of local environment committees which shall monitor all activities with in its local jurisdiction and report any event or Activities which have or are likely to have significant impacts on the environment to the district environment office. On the contrary, the district had not constituted Local environment committees. Management attributed this to limited finances to coordinate formation of committees. This limits coordination and monitoring of environmental activities at the lower levels which exposes the wetlands and forest reserves to illegal use. Management explained that appointments were done during the tenure of the previous Councils of the LLGs where some remained while others were voted out

I advised the Accounting Officer to budget for the finances to ensure that the appointment of the Local environment committees is done as per the law requires.

6.2 Inadequate monitoring and supervision of the usage of Natural Resources Section 14 of the National Environment Act Cap153 requires the district environment committee to prepare a district state of the environment report every year. Contrary to the regulation, this report was not prepared. This could be due to capacity gap on the law requirement.

This undermines the core function of the committee there by casting doubt on its functionality. Also it hinders monitoring of other oversight bodies. Management acknowledged the anomaly and explained that the skeletal committees that remained have been encouraged to monitor and supervise the usage of the natural resources as the proposed appointment of new committees is due.

I advised the Accounting Officer to strengthen monitoring and preparation of reports as required by the regulation.

6.3 Existence of land office and staffing According to Section 59(6) of the Land Act, each District Council shall have a District Land Office comprising the offices of the District Physical Planner, the District Land Officer, the District Valuer, the District Surveyor and District Registrar of Titles. The importance of the office is to provide technical guidance on management and utilization of natural resources.

A review of the organogram and management structure of the district indicated that there is provision for the positions as mentioned above. However, the positions of district surveyor and district registrar of titles are vacant. This denies the population of the district the much needed service of ensuring that the natural resources are adequately managed and purposefully utilized.

Management explained that a proposal has been made to fill critical gaps under the customization of Staff Structure as required by the Public Service. However, because of absence of an active council, this is yet to be implemented by the district

I advised the Accounting Officer to liaise with the relevant authorities and ensure that the positions are filled.

6.4 Demarcations and size of the wetlands According to Section 37(3) NEA, the authority may, in consultation with the lead agency and the District environment committee, declare any wetland to be a protected wetland, thereby excluding or limiting human activities in that wetland.

It was observed that for all the wetlands marked by the District, both their demarcations and sizes remained unknown. Management explained that plans are under way to demarcate them once funds permit.

I advised the Accounting Officer to engage responsible authorities to have demarcations and sizes of wetlands established.

7.0 Procurement of Public Works 7.1 Failure to report a fraudulent company to PPDA Regulation 348 of PPDA Regulations, 2003 states that a provider may be suspended from participating in public procurement or disposal of public assets proceedings for breaching the Code of Ethics for providers. Also Regulation 349 (1) of the same regulation requires that a recommendation to suspend a provider shall be submitted to the Authority in writing by a contracts committee.

Kenya Commercial Bank (KCB) wrote a letter reference CR/214/54, dated 24th November 2017 to the district disowning the bid security of UGX.1,500,000 from Speed construction Co. Ltd for construction of Kisoko HCIII and Mulanda HCIV and thereby rendering the company fraudulent.

Contrary to the law, the district did not report to the Authority for suspension for breach of Code of Ethics for providers.

This is due to laxity of the contracts committee to take action potentially protecting fraudulent company in the market hence incompetency and shoddy works. Management explained that the company had been referred to PPDA for further action. But correspondences were not availed for audit.

I advised the Accounting Officer to comply with the regulation.

7.2 Procurement not in the procurement Plan Regulation 96 (1) of the PPDA Regulations, 2003 requires a user department to prepare a multi-annual, rolling work plan for procurement based on the approved budget, which shall be submitted to the procurement and disposal unit to facilitate orderly execution of annual procurement activities.

It was noted that procurement worth UGX.58,100,000 for Training of Tororo District Local Government Leaders, Technical Staffs and sub-county Leaders and their Technical Staffs was made without being included in consolidated district procurement plan a reported to PPDA. This was attributed to user department failure to advise the PDU on the procurement. This exposes the council to unplanned procurements affecting budget implementation and monitoring.

This was attributed to user department failure to advise the PDU on the procurement However, I take note of the omission in the procurement plan and subsequently this anomaly shall be addressed.

I advised the Accounting Officer is advice to strength then communication between the user departments and PDU to ensure consolidation process is effectively done.

8.0 Capitation Grant 8.1 Audit of SOP-SOP Primary School under capitation Grant i. The school budgeted for 11,949,000 but received UGX.11,717,246.53 resulting into a shortfall of UGX.231,753 (2 %). There was no evidence of linking the budget to the enrolment. This was attributed to limited knowledge on regulation requirements on budgeting process. This affects service delivery by the school. ii. Contrary to Para 5.5 of the simplified Guidelines on budgeting, accounting and reporting for schools, the school did not prepare financial statements, I could not verify the accuracy and classification in the transactions and events that took place. Management noted the recommendation and promised to arrange training for head teachers on how to prepare financial statements.

I wait to follow up the implementation of the promised measure

9.0 Management of basic medical equipment 9.1 Inadequate ambulance services There is only one ambulance which sometimes lacks fuel to pick patients who are ill and need to be picked for urgent attention. The hospital has no means of transport to carry out its activities in time. This affects coordination of urgent cases which results into loss of lives. Management attributed this to budget underfunding against many priorities and hopes that, the Central Government under Commissioner of Emergency health Services and National Ambulance system is soon coming out with a policy.

I advised the Accounting Officer to liaise with the responsible line ministries to improve on the ambulance services at the district hospital. Fuel and proper servicing of the available ambulance should be a priority in planning.

9.2 Inadequate Health and safety measures According to Occupational Safety and Health Act, 2006 Section 13 requires that an employer should take, as far as is reasonably practicable, all measures for the protection of his or her workers from the dangerous aspects of the employer’s undertaking at his or her own cost. In the maternity ward particularly, I observed lack of protective gear such as gloves, gumboots, aprons, masks, eye glasses etc. This exposes the staff to risks of service delivery.

The Accounting Officer attributed this to the inadequacy of funding. This matter requires urgent attention.

9.3 Status of the Basic Medical equipment Section 5.17 of Health Sector Service standards & Service delivery standards, 2016 requires that appropriate medical equipment should be available for services delivery and level of care. However, I observed cases of shortage of medical equipment, lack of basic equipment and faults in available equipment as shown in appendix 3.

The Accounting Officer agreed with the finding but explained that they get support from the regional health workshop. He reported that the listed equipment were indeed assembled awaiting that support.

This implies ineffectiveness in service delivery.

I advised the Accounting Officer to evaluate the state and conditions of the basic medical equipment to ensure proper planning is made for acquisitions, maintenance and disposal of idle equipment to ensure appropriate equipment levels at the Hospital.

10.0 Others 10.1 Understaffing The District has an approved staff structure of 3,380 positions. However, out of the approved staff structure of only 2,628 (77%) are filled leaving a staffing gap of 762 (23%) positions as shown in table below;

%Age DEPARTMENT APP.NO FILLED. NO VACANT. NO Understaffing ADMINISTRATION 616 292 334 54% PRIMARY 1,864 1,769 95 5% HEALTH 900 567 333 37% TOTAL 3,380 2,628 762 23%

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

Management explained that attempts were made to seek clearance to recruit but the process stalled because of the non-functionality of the District Service Commission.

I advised the Accounting Officer to engage the Ministry of Public Service, the Ministry of Local Government and the Ministry of Finance Planning and Economic Development to address the challenge.

10.2 Failure to Implement Budget as approved by Parliament Section 45 (3) of the Public Finance Management Act, 2015 states that “An Accounting Officer shall enter into an annual budget performance contract with the Secretary to the Treasury which shall bind the Accounting Officer to deliver on the activities in the work plan of the vote for a Financial year, submitted under section 13 (15) of the said Act”. Based on the procedures performed, I observed that out of the budgeted revenue of UGX.48,026,606,452, the District local government Realised UGX.44,339,711,746 (92%) resulting into a shortfall of UGX.3,686,894,706 (8%). I also noted that a

number of planned activities were not implemented. The greatly affected sectors included production, health and community activities. Failure to implement the activities denies service to the beneficiary communities and defeats the purpose for which budgeting and budgetary controls are instituted. The failure to implement all the planned activities may have been a result of lack of capacity and inadequate releases or may be an indication of inefficiency.

This was attributed to Central government and donor budgets which are normally subjected to budget cuts beyond the district control. Management pledged that going forward the Accounting Officer will engage the relevant authorities to address budget deficiencies and that legal redress is being pursued with respect to persistent defaulting Tax Payers/Revenue Collection Contractors.

I advised the Accounting Officer to engage the relevant authorities and ensure that budget deficiencies are addressed so that all the allocated funds are released and all activities are implemented according to the budget as approved by parliament.

10.3 Local Revenue Shortfall Section 32 of the Local Governments Financial and Accounting Regulations, 2007 requires the head of finance to be responsible for revenue collection and ensure that all revenue due to the council is promptly collected and banked intact. However, review of the financial statements revealed that out of the budgeted sum of UGX.1,319,433,012 only UGX.644,552,023 was realized leading to a shortfall of UGX.674,880,989 (51%). Relatedly, the statement of arrears of revenue shows an annual movement in arrears of revenue from the UGX.1,365,500,060 at the beginning of the year to UGX.2,040,381,049 at the year end, reflecting an increase of UGX.674,880,989.

This is attributed to inadequate revenue records, revenue contracts management and laxity in enforcing collection of arrears. Management attributed this mainly to the non-functionality of the council which affected the formation of the valuation courts to implement the valuation rolls.

Failure to collect all the budgeted local revenue negatively affects the implementation of the planned activities.

I advised the Accounting Officer to institute measures to ensure that all budget revenue is collected.

10.4 Revenue Accountability and contracts Section 4.7.1 of LGFAM 2007 states that the Head of Finance shall prepare and submit a monthly revenue distribution return for the previous month to other Councils at least within seven day of the following month, this return shall contain all sources of local revenue collected. However, the district did not prepare distribution returns for the year under audit.

Relatedly, revenue collection contracts worth UGX.338,845,300 were entered with 39 contractors across various sub-counties as shown in Appendix 4. However, at the end of the financial year, the contracted companies had not settled the outstanding balances and no progress reports were in place for monitoring collections.

Consequently, I could not confirm how Local revenue was collected and distributed between sub-counties and the district with a possibility of revenue being collected by contract managers and not disclosed to the district. Management listed measures to improve collection including the emphasis of payment of 50% of the revenue collection contract sum by the Contracted Revenue Collection Service providers, Legal redress to persistent defaulting Tax Payers/Revenue Collection Contractors, among others.

The Accounting Officer is advised to institute measures to have contracted revenue collected. Also revenue distribution should be done as required and supervision by contract managers improved.

John F.S. Muwanga AUDITOR GENERAL KAMPALA

10th December, 2018

APPENDICES Appendix 1: Noncompliance with the repayment schedule PROJECT NAME DISBURSED PERCE AMOUNT AMOUNT NTAG OUTSTANDIN RECOVERED PERCEN (USH.) E G AMOUNT TAGE RECO OUTSTA VERY NDING

Achilet 'C' Tailoring & Designing Youth Group 12,500,000 1,120,000 9% 11,380,000 91% Adaumu 'A' Tailoring Youth Group 5,500,000 1,894,000 34% 3,606,000 66% Akoret 'B' Produce Buying & Selling 8,500,000 1,100,000 13% 7,400,000 87% Akouketom Produce Marketing Youth Project 5,200,000 4,650,000 89% 550,000 11% Alupe 'B' Youth Animal Traction Project 5,886,000 2,760,000 47% 3,126,000 53% Amagoro 'A' North Youth Salon Project 6,533,000 400,000 6% 6,133,000 94% Amagoro 'A' Youth Auto-Motocycle Spare 9,000,000 Parts 860,000 10% 8,140,000 90% Amurwo Youth Devoted Farmers Produce Association 6,020,000 3,390,000 56% 2,630,000 44% Angorom Youth Ageun Tents & Chairs for Hire 12,350,000 1,550,000 13% 10,800,000 87% Asinge United Youth Piggery Group 9,235,000 1,250,000 14% 7,985,000 86% Asinge Youth Welding & Metal Fabrication Project 7,290,000 270,000 4% 7,020,000 96% Asinget 'A' Youth With A Mission Produce Project 10,450,000 1,700,000 16% 8,750,000 84% Atangala G.Nuts Youth Interest Group 9,973,296 1,750,000 18% 8,223,296 82% Atiri Parish Youth With A Vision Piggery Project 5,299,000 4,070,000 77% 1,229,000 23% Atiri-Landi Youth Piggery Project 6,300,000 915,000 15% 5,385,000 85% Awanya Youth Produce Buying & Selling Group 6,640,000 2,000,000 30% 4,640,000 70% Awaya Youth Piggery Project 6,458,000 - 0% 6,458,000 100% Aygo 'A' Youth Post Harvest Handling Project 8,350,000 2,956,000 35% 5,394,000 65% Bendo Events Managers Computer Services 11,500,000 150,000 1% 11,350,000 99% Bira East Pari Kwom Soye Tents & Chairs YIG 9,000,000 300,000 3% 8,700,000 97% Central Youth Band Brigade 12,500,000 - 0% 12,500,000 100% Central Youth Produce Project 12,500,000 11,920,000 95% 580,000 5% Chalumba Youth Animal Traction Group 7,400,000 - 0% 7,400,000 100% Kachinga Youth Farmers Produce Association 8,300,000 1,770,000 21% 6,530,000 79% Kakola 'B' Youth Piggery Project 6,300,000 230,000 4% 6,070,000 96% Kataboi Youth Development Group 5,800,000 2,345,000 40% 3,455,000 60% Kidoko Youth Agro-Business Enterprise 6,810,000 1,886,000 28% 4,924,000 72% Kisoko Youth Metal Fabricators 4,755,000 774,000 16% 3,981,000 84% Kojim Produce Buying & Selling 9,000,000 240,000 3% 8,760,000 97% Komelako Youth Bakery Project 7,704,300 1,110,000 14% 6,594,300 86% Komolo Youth Bakery Project 9,974,000 4,340,000 44% 5,634,000 56% Komolo Youth Produce Dealers Project 6,310,000 1,000,000 16% 5,310,000 84% Mahanga Youth Produce Buying & Selling Group 7,400,000 2,200,000 30% 5,200,000 70% Malaba ICT System Youth Project 15,660,000 1,350,000 9% 14,310,000 91% Malaba United Youth Association Produce 5,800,000 950,000 16% 4,850,000 84%

Buying & Selling Mella Pajabo A Youth Produce Project 7,000,000 770,000 11% 6,230,000 89% Molo Youth Development Forum Produce Dealing 5,630,000 1,850,000 33% 3,780,000 67% Moriwa South Youth Turkey Rearing Project 6,688,000 1,850,000 28% 4,838,000 72% Moriwa Youth Events Management Project 10,000,000 855,000 9% 9,145,000 91% Moru 'B' Youth Tents & Plastic Chair Project 12,500,000 664,000 5% 11,836,000 95% Naboa Produce Buyers Youth Project 5,000,000 170,000 3% 4,830,000 97% Nagoke Youth Piggery Project 4,670,000 360,000 8% 4,310,000 92% Namwendia Produce Buyers Youth Project 5,000,000 150,000 3% 4,850,000 97% Ngulimo Youth Piggery Project 4,770,000 696,000 15% 4,074,000 85% Nyasirenge East Youths Tents & Chairs 11,400,000 1,500,000 13% 9,900,000 87% Ochoto Youth Grinding Mill 6,000,000 - 0% 6,000,000 100% Okwenga Youth Produce Buying & Selling 9,400,000 1,700,000 18% 7,700,000 82% Omagoro Youth Piggery Project 8,627,000 2,130,000 25% 6,497,000 75% Pabala East Produce Dealers Youth Project 4,880,000 2,000,000 41% 2,880,000 59% Pajabo 'B' Youth Piggery Project 6,646,000 - 0% 6,646,000 100% Pambogo Youth Produce Buying & Selling 9,730,000 3,000,000 31% 6,730,000 69% Parima Youth Cattle Dealers Project 8,300,000 1,432,000 17% 6,868,000 83% Paya Central Youths Tents & Chairs 10,500,000 1,276,000 12% 9,224,000 88% Pojulo Produce Buying & Value Addition 10,874,000 860,000 8% 10,014,000 92% Pokongo Penyi Youth Poultry Project 7,670,000 1,203,000 16% 6,467,000 84% Posuna 'B' Youth Dealers in Agric Produce Project 6,977,727 1,760,000 25% 5,217,727 75% Poyem 'A' Youth Produce Buying& Selling 9,400,000 4,632,780 49% 4,767,220 51% Pupono Youth Rice Huller 6,300,000 1,060,000 17% 5,240,000 83% Puron Youth Produce Buying & Selling Project 8,400,000 702,500 8% 7,697,500 92% Railway Quarters Produce Youth Project 12,300,000 4,138,000 34% 8,162,000 66% Rudam Youth Piggery Project 6,130,000 - 0% 6,130,000 100% Senior Quarters Youth Movie Industry 12,500,000 - 0% 12,500,000 100% Senior Quarters Youth Tents & Chairs 12,000,000 Project 600,000 5% 11,400,000 95% Seseme Youth Produce Marketing Association 8,750,000 2,020,000 23% 6,730,000 77% Sesra Catholic Youth Poultry/Egg Production 11,371,000 980,000 9% 10,391,000 91% Siwa 'C' Youth Tents & Chairs Project 6,000,000 3,550,000 59% 2,450,000 41% Soni Bulalo Catering Services 11,595,000 10,269,000 89% 1,326,000 11% Sopsop South Buying & Selling Project 4,880,000 600,000 12% 4,280,000 88% South Central East Stationery Enterprise 8,485,000 300,000 4% 8,185,000 96% Tawojwok Youth Metal Fabrication Group 7,400,000 2,944,500 40% 4,455,500 60% Time Up Youth Mixed Group Rice Huller 8,300,000 - 0% 8,300,000 100% Totokidwe Youth Empowerment Goat Rearing Project 5,825,000 300,000 5% 5,525,000 95% Tuba Central Youth Bakery Project 12,000,000 800,000 7% 11,200,000 93% Water Village Produce Youth Project 12,500,000 - 0% 12,500,000 100% Were Youth Agro-Processing Group 7,000,000 1,107,000 16% 5,893,000 84% Yokolo Paro Ber Ox-Traction Youth Group 7,000,000 620,000 9% 6,380,000 91% 628,596,323 122,049,780 506,546,543 80

Appendix 2: Road Fund performance

Length Length Budget Sn Road name Km treated /Contract sum Exp'ture Variance Remarks Periodic Maintenance (URF) 1 Tororo-Kwapa- 2.5 2.5 9.3km of road Salosalo (9.3km) 36,000,000 37,393,000 (1,393,000) reshaped and 2.5km spot graveled 2 Merekit-Musi-Paya 2.5 2.5 2.5km of road (11.0) 22,500,000 23,385,625 (885,625) reshaped and spot graveled 3 Paya - Senda 2 1.8 626,280 8.0km of road (8.0km) 27,000,000 26,373,720 reshaped, 1.8km spot graveled and 2line 900mm diameter culverts installed 4 Pajwenda - 3.5 3.5 11,392,500 8km km of road Poyawoweri 35,500,000 24,107,500 reshaped and (8.0km) 3.5km spot graveled 5 Nagongera 3 3 10.5km of road Matawa - 32,000,000 33,045,500 (1,045,500) reshaped and Nabuyoga 2.5km spot (10.5km) graveled 6 Iyolwa - Fungwe 3 0 25,725,000 11.7km of road (11.7) 31,500,000 5,775,000 reshaed Total 16.5 13.3 34,419,655 184,500,000 150,080,345 Maintenance of Bridges /culverts (URF) 1 Morukatipe-Oriyoi 12 m 12m Completed 8,000,000 8,574,150 (574,150) 2 Kwapa - Salosalo 21m 21m 970,500 Completed 16,159,000 15,188,500 3 UTRO-Buyemba 6m,1.2km 0 127,320 Completed 15,500,000 15,372,680 4 Completion of the 4.5 m 4.5 m - Completed re-Construction of span span 40,758,655 40,758,655 Osia Bridge 5 Kisote - 18m 18m - Completed Nyamalogo 7,464,412 7,464,412 6 TGS-Water works payment for 2,816,000 (2,816,000) culvert installation Total - 87,882,067 90,174,397 (2,292,330) Routine Manual Maintenance/ Mechanized (URF) Mechanized Maintenance 1 Atiri-Akworot 7.0 7.0 The cost of 5,075,000 7,292,000 (2,217,000) works increased due to rising fuel prices 2 Malawa Matawa 5.5 5.5 2,897,500 - 3,987,500 1,090,000 Do- 3 Tuba Merikit 10.3 10.3 - 7,467,500 11,352,870 (3,885,370) Do- 4 Nagongera - 8.8 8.8 - Kakajula - Kirewa 6,380,000 7,856,400 (1,476,400) Do- 5 Nagongera - NTC 5.6 5.6 - - Corner Bar 4,060,000 6,092,140 (2,032,140) Do- 6 TGS - Water 4.9 9.9 -

works-Amoni- 3,552,500 7,133,600 (3,581,100) Do- Finya 7 Asinge-Morukebu- 13.5 13.5 - Kalait 9,787,500 11,272,500 (1,485,000) Do- 8 Katajula-Kirewa- - Wikus 10.5 10.5 7,612,500 8,745,500 (1,133,000) Do- 9 Kisoko - Peipei - Petta 8 8 5,800,000 9,177,700 (3,377,700) Do- 10 Achilet C- - Maguria 4 4 2,900,000 4,462,890 (1,562,890) Do- 11 Pabas - Nambogo- - Ngetta - Iyolwa 13.1 13.1 9,497,500 12,626,900 (3,129,400) Do- 12 - Siwa - lugingi 4.4 4.4 3,190,000 4,836,260 (1,646,260) Do- 13 - C A - Agururu 7.9 7.9 5,727,500 8,433,310 (2,705,810) Do- 14 - Sengo - Nawire 0 5.6 - 5,584,140 (5,584,140) Do- 15 Angorom - Apuwai - -Asinge 0 7 - 7,192,000 (7,192,000) Do- 16 - Mella Kalait 0 5.6 6,491,000 (6,491,000) Do-

Total 103.5 126.7 75,037,500 119,639,210 (44,601,710)

Appendix 3: Status of Medical equipment Name of equipment Standard Quantity Quantity required quantity available THEATHRE Anaesthetic Unit, EMO with Vaporizer 3 1 2 Operating light, mobile 2 0 2 Oxygen concentrator 1 0 1 Resuscitation manual adult 2 1 1 Resuscitation manual infant 2 1 1 X-Ray film viewer 2 0 2 Diagnostic equipment set for MD 2 0 2 Instrument set-General Anaesthesia 1 0 1 Instrument set-anaesthetic local drug 2 0 2 Instrument set-hernia, hydrocoelectomy 1 0 1 Instrument set-General surgery, large 2 3 Incomplete accessories Instrument set-hernia, hydrocoelectomy 1 0 1 Instrument set-lumber puncture adult 1 0 1 Instrument set-lumber puncture paediatric 1 0 1 Instrument set-orthopaedics 1 0 1 Instrument set-pleural biopsy 1 0 1 Instrument set-skin biopsy 1 0 1 Instrument set-skin graft 1 0 1 Instrument set-tracheotomy 1 0 1 Instrument set-tubal ligation 1 0 1 Instrument set-urology 1 0 1 Air Conditioner 2 0 2 Sphygmomanometer 5 0 5 Theatre stools 10 2 8 Recovery beds 4 0 4 Drip stands 10 2 8 Pulsoximeter 10 0 10 X-Ray X-Ray protective wear 5 2 3 Diagnostic equipment set for MD 1 0 1

CT scan 1 0 1 Doppler machine 1 0 1 x-ray sixer 20 0 20 Gonadal shields 6 0 6 Film cutter Non Warning Non Martenity B.P Machine–maternity ward 2 0 2 Diagnostic equipment set for the ward 1 0 1 Diagnostic equipment set for MCH 2 0 2 Foetal heart detector, Doppler 1 0 1 Hospital bed-baby cot 2 0 2 Instrument set delivery 6 0 6 Oxygen concentrator 1 0 1 Oxygen cylinder 1 0 1 Phototherapy unit 1 0 1 Resuscitation infant 1 0 1 Suction apparatus-electric 2 0 2 Suction apparatus, foot 2 0 2 Vacuum extractor 2 0 2 Examination light 2 0 2 Drip stands 10 1 8 Infant resuscitation table 2 0 2 Pulsoximeter 10 0 10 MVA set 10 0 10 Wheel chair 2 0 2 Laboratory Balance laboratory precision 300g/0.01 1 0 1 Centrifuge manual 2 0 2 Counter chamber Fuchs Rosenthal 2 1 1 Counter chamber Fuchs Rosenthal 2 1 1 Haemoglobin meter 2 0 2 Incubator culture 1 0 1 Bio-safety cabin 1 Automatic pipettes 1000microlitres 4 2 2 UPS 2 0 2 Timers 2 0 2 Wall clock 6 0 6 ESR Apparatus westergren 2 2 Tubes are lacking Weighing balance electric 2 1 1

Appendix 4: revenue accountability and contracts

Subject of Procurement Provider/Purchaser Contract Value UGX Collection of market fees from Apokor Market in Mella sub county for Omaidi Paul 4,285,000 the financial year 2017-2018 Collection of Boda Boda Registration fees from Malaba Town Council Malaba Akimorikikina 8,004,000 for the financial year 2017-2018 Boda Boda Association, Collection of market fees from Iyolwa Market in Iyolwa sub county Okello Obbo Ndejjo, C/O 1,100,000 Iyolwa Sub-County Collection of market fees from Kalait Market in Mella sub county for Asangire Annet Mukuru 1,620,000 the financial year 2017-2018 C/O Mella Sub-County Collection of market fees from Katajula Market in Nagongera sub Owor Wilber, C/O 10,800,000 county for the financial year 2017-2018 Nagongera Sub County Collection of market fees from Kwapa Market in Kwapa sub county for Imai Paul, C/O Kwapa 5,004,000 the financial year 2017-2018 Sub-County Collection of market fees from Mahanga Market in Nagongera Town Ochwo Zephania, 3,050,000 Council for the financial year 2017-2018 Collection of market fees from Malaba Market in Malaba Town council Malaba Cooperative And 81,000,000

22 for the financial year 2017-2018 Credit Society Ltd, Collection of market fees from Merikit Market in Merikit sub county for Othieno Erasmus, 4,558,000 the financial year 2017-2018 Collection of market fees from Mile 8 Market in Magola sub county for Okongo Gabriel, 2,400,000 the financial year 2017-2018 Collection of Parking fees from Mile 8 Stage Park in Magola sub-county Oroni Stephen, 5,750,000 for the financial year 2017-2018 Collection of Parking fees from Mile 8 Taxi Park in Molo sub county for Oketcho Moses, 1,524,000 the financial year 2017-2018 Collection of Parking fees from Mile 11 Stage Park in Magola sub- Orone Steven, 6,890,000 county for the financial year 2017-2018 Collection of market fees from Mile II Market in Kirewa sub county for Okello Emmanuel, 1,300,000 the financial year 2017-2018 Collection of market fees from Molo Stage Market in Molo sub county Oketcho Moses, 624,000 for the financial year 2017-2018 Collection of Parking fees from Nagongera Town Council for the Apio Bena, 8,250,000 financial year 2017-2018 Collection of market fees from Omwonyole Market in Kisoko sub Okoth Sebastian, 11,200,000 county for the financial year 2017-2018 Collection of market fees from Osukuru Corner Market in Osukuru sub Sutuma General 14,208,000 county for the financial year 2017-2018 Investments Ltd, Collection of Parking fees from Osukuru Corner Park in Osukuru sub- Fiona International 26,044,800 county for the financial year 2017-2018 Limited, P.O Box 427, Tororo Collection of market fees from Parima Market in Petta sub county for Kayande Enterprises Ltd, 26,800,000 the financial year 2017-2018 P O Box 983, Collection of market fees from Pasindi Market in Mulanda sub county Obbo Ndejjo Okello, C/O 6,700,000 for the financial year 2017-2018 Mulanda Sub County Collection of market fees from Paya Market in Paya sub county for the Okello Leo Kelly, 2,405,500 financial year 2017-2018 Collection of market fees from Siwa Market in Nabuyoga sub county Aluku Yokoyada, 20,500,000 for the financial year 2017-2018 Collection of slaughter fees from Iyolwa sub county for the financial Okongo Lawrence,C/O 1,900,000 year 2017-2018 Iyolwa Sub County Collection of slaughter fees from Kisoko sub county for the financial Owere Anthony, 3,588,000 year 2017-2018 Collection of slaughter fees from Malaba Town Council for the financial Malaba Abattoir Savings 7,900,000 year 2017-2018 & Credit Association, Collection of slaughter fees from Mella sub county for the financial Orono Micheal Okeya, 1,533,000 year 2017-2018 C/O Mella Sub County Collection of slaughter fees from Merikit sub county for the financial Mboine Emmanuel, 3,656,000 year 2017-2018 Collection of slaughter fees from Mulanda sub county for the financial Okongo Lawrence, 2,900,000 year 2017-2018 Collection of slaughter fees from Nabuyoga sub county for the Oboth John, 4,200,000 financial year 2017-2018 Collection of slaughter fees from Nagongera Town Council for the Osamai Andrew, 3,300,000 financial year 2017-2018 Collection of slaughter fees from Nagongera sub county for the Ofwono David, 3,550,000 financial year 2017-2018 Collection of slaughter fees from Osukuru sub county for the financial Ekwaro Raymond, 6,000,000 year 2017-2018 Collection of slaughter fees from Petta sub county for the financial Obbo Innocent, 2,640,000 year 2017-2018 Collection of slaughter fees from Rubongi sub county for the financial Owori Joseph Orono, C/O 7,137,000 year 2017-2018 Rubongi Sub County Collection of slaughter fees from Sop Sop sub county for the financial Matia Livingstone, 1,600,000 year 2017-2018 Collection of Parking fees from Molo Stage Park in Molo sub county for Oketcho Moses, 1,524,000 the financial year 2017-2018 Collection of trading license fees from Paya sub-county for the Muranga John Peter 2,400,000 financial year 2017-2018 Pikirieko,

Collection of market fees from Tuba Market in Molo sub county for the Rinnus Company Ltd, 31,000,000 financial year 2017-2018 TOTAL 338,845,300