OFFICE OF THE AUDITOR GENERAL

THE REPUBLIC OF

REPORT OF THE AUDITOR GENERAL

ON THE FINANCIAL STATEMENTS OF LOCAL GOVERNMENT

FOR THE FINANCIAL YEAR ENDED 30TH JUNE 2016

TABLE OF CONTENTS

LIST OF ACROYNMS ...... 2

1.0 INTRODUCTION ...... 5

2.0 AUDIT SCOPE ...... 5

3.0 AUDIT PROCEDURES PERFORMED ...... 6

4.0 ENTITY FINANCING ...... 7

5.0 FINDINGS...... 7

5.1 Categorization of findings ...... 7

5.2 Summary of findings ...... 7

6.0 DETAILED AUDIT FINDINGS ...... 7

6.2 Hospital Land under Dispute ...... 8

6.3 Understaffing ...... 8

Appendix I: - Understaffing ...... 10

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LIST OF ACROYNMS

DLG District Local Government ICT Information Communication Technology

MoFPED Ministry of Finance Planning and Economic Development

UGX Uganda Shillings

VAT Value Added Tax

WHT Withholding Tax

URA Uganda Revenue Authority

PFMA Public Finance Management Act

ISA International Standards on Auditing

ISSAI International Standards for Supreme Audit Institutions

PPDA Public Procurement and Disposal of Assets

MoESTS Ministry of Education Science and Technology and Sports

PHC Primary Health Care

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REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF MOYO DISTRICT LOCAL GOVERNMENT FOR THE YEAR ENDED 30TH JUNE, 2016

THE RT. HON. SPEAKER OF PARLIAMENT

Introduction I have audited the Financial Statements of Moyo District Local Government for the year ended 30th June 2016. These financial statements comprise the Statement of Financial Position, the Statement of Financial Performance, and Cash flow Statement together with other accompanying statements, notes and accounting policies.

Management Responsibility Under Article 164 of the Constitution of the Republic of Uganda, 1995 (as amended) and Section 45 of The Uganda Public Finance Management Act, 2015, the Accounting Officer is accountable to Parliament for the funds and resources of Moyo District. 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 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.

Auditor’s Responsibility My responsibility as required by Article 163 of the Constitution of the Republic of Uganda (as amended), section 87 of the Local Governments Act, 1997, and Sections 13, 16 and 19 of the National Audit Act, 2008 is to audit and express an opinion on these statements based on my audit. I conducted the audit in accordance with International Standards on Auditing. Those standards require that I comply with the ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing audit procedures to obtain evidence about the amounts and disclosures in the financial statements as well as evidence supporting compliance with relevant laws and regulations. The procedures selected depend on the Auditor’s judgment including the assessment of risks of material misstatement of financial statements whether due to fraud or error. In making those risk assessments, the Auditor considers internal control relevant to the entity’s preparation and fair presentation of financial statements in order to design audit procedures that are appropriate in the circumstances but not for

3 purposes of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management as well as evaluating the overall presentation of the financial statements. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

Part “A” of this 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 during the audit which have been brought to the attention of management and form part of my Annual Report to Parliament.

PART “A”

Opinion In my opinion, the financial statements of Moyo District Local Government as at 30th June 2016 are prepared, in all material respects, in accordance with the Local Governments Financial and Accounting Manual, 2007, Section 51(3) of The Public Finance Management Act, 2015 and the Local Governments Financial and Accounting Regulations, 2007 and the Local Governments Act, 1997, cap 243 (as amended), of the Laws of Uganda.

John F.S. Muwanga AUDITOR GENERAL 2nd December, 2016

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PART "B"

DETAILED REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENT OF MOYO DISTRICT LOCAL GOVERNMENT FOR THE YEAR ENDED 30TH JUNE 2016

1.0 INTRODUCTION In accordance with Article 163(3), of the Constitution of the Republic of Uganda, 1995 (as amended), I am required to audit and report on the public accounts of Uganda and of all public offices, including the courts, the central and the Local Government Administrations, Universities and Public Institutions of the like nature and any public corporation or other bodies or organizations established by an Act of Parliament. Accordingly, I carried out the audit of the Moyo District to enable me report to Parliament.

2.0 AUDIT SCOPE The audit was carried out in accordance with International Standards on Auditing and accordingly included a review of the accounting records and agreed procedures as was considered necessary. The audit was carried out with regard to the following objectives:- a. To verify whether the financial statements have been prepared in accordance with the requirements of the Local Governments Financial and Accounting Manual 2007; and the Local Governments Financial and Accounting Regulations 2007; and fairly present the income and expenditures for the year and of the financial position as at the end of the year. b. To verify whether all the funds of the entity were utilized with due attention to economy and efficiency and only for the purposes for which the funds were provided. c. To verify whether goods and services financed have been procured in accordance with the Public Procurement and Disposal of Public Assets (PPDA) Act 2003 (as amended). d. To evaluate and obtain sufficient understanding of the internal control structure of the entity, assess control risk and identify reportable conditions, including material internal control weaknesses.

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e. To verify whether the management of the funds of the entity was in compliance with the Government of Uganda Financial Regulations. f. To verify whether all the necessary supporting documents, records and accounts have been kept in respect of all activities, and are in agreement with the financial statements presented.

3.0 AUDIT PROCEDURES PERFORMED The following audit procedures were undertaken:-

a. Revenue Obtained all schedules of all revenues collected and reconciled the amounts to the cashbooks and bank statements of the entity.

b. Expenditure The payment vouchers of the entity were examined for proper authorization, eligibility and budgetary provision, accountability and support documentation.

c. Internal Control System Reviewed the internal control system and its operations to establish whether sound controls were applied throughout the period

d. Procurement Reviewed the procurement of goods and services under the various departments during the period under review and reconciled with the approved procurement plan.

e. Fixed Assets Management Reviewed the use and management of the assets of the entity during the period under review.

f. Financial Statements Examined, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessed the accounting principles used and significant estimates made by management; as well as evaluated the overall financial statement presentation.

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4.0 ENTITY FINANCING Moyo District is financed by grants (Conditional and Unconditional) from the Central Government, donations and locally generated revenues from taxes, fees, licenses and charges. During the year, the district received grants totaling to UGX.18,147,712,298 from the Central Government, UGX.659,373,634 from donations and UGX 178,499,087 from locally generated revenues. The total revenue of UGX.18,985,585,019 constituting 90% of its approved budget estimates of UGX.21,032,585,274.

5.0 FINDINGS

5.1 Categorization of Findings The following system of profiling of the audit findings has been adopted to better prioritize the implementation of audit recommendations:

CategoryN Description o 1. High significance Has a significant/material impact, has a high likelihood of reoccurrence, and in the opinion of the Auditor General, it requires urgent remedial action. It is a matter of high risk or high stakeholder interest. 2. Moderate significance Has a moderate impact, has a likelihood of reoccurrence, and in the opinion of the Auditor General, it requires remedial action. It is a matter of medium risk or moderate stakeholder interest. 3. Low significance Has a low impact, has a remote likelihood of reoccurrence, and in the opinion of the Auditor General, may not require much attention, though its remediation may add value to the entity. It is a matter of low risk or low stakeholder interest.

5.2 Summary of findings No Finding Significance 6.1 Lack of Land Titles High 6.2 Hospital Land under dispute High 6.3 Understaffing Moderate

6.0 DETAILED AUDIT FINDINGS This section outlines the detailed audit findings, management responses and my recommendations.

6.1 Lack of Land Titles Regulation 58 (4) of the Local Government Financial and Accounting Regulations 2007, requires the properties and assets of a local government to be properly registered and titles issued. However, the District did not have land titles for the land where its properties are located. Lack of land titles expose the land to the risk of encroachment and disputes.

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This was attributed to lack of funds to process land titles and absence of Land Boards.

I advised the Accounting Officer to ensure that the land titles are secured.

6.2 Hospital Land under Dispute It was observed that management of Moyo Hospital constructed the Out Patients Department partly on a land belonging to the community neighboring the hospital and on the road from the Town Council to the surrounding village before reaching an agreement with members of the community and management of the Town Council. Consequently, community opened a court case against the district but the High court Judge referred the case to the alternative dispute resolution. The District Council under the council minute dated 22nd December 2015 agreed to pay UGX.665,333,864 to the community as a compensation for the land. Subsequently the district started evicting members of the community from the land before compensation and in total disregard of the advice from the judge. This case had not been resolved by the time of writing this report hence causing a contingent liability to the district.

It was further observed that the pending settlement was neither recognized nor disclosed in the district financial statements.

The Accounting Officer explained that the disputed land belonged to the hospital; however it was erroneously given to the complainants by the District Land Board sometime back with some condition, which the complainants failed to oblige. But the Ministry of Health is willing to compensate the complainants.

The matter requires urgent attention.

6.3 Understaffing The district has an approved staff establishment of 2,057 posts. However, out of 2,057 established posts, only 1,600 were filled leading to a staffing gap of 457 posts representing 22% as shown in Appendix I. 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.

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The Accounting Officer explained that the plan to recruit Primary Health Care (PHC), Agricultural Extensions and staff under unconditional grant for both the District and the urban council had been submitted to Ministry of Public Service.

I advised the Accounting Officer to engage the Ministry of Public Service and ensure that vacant positions are filled.

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Appendix I: - Understaffing

Staffing summary as at June 2016 Station S/n Staffing Information Status Gender Analysis % age Name Appro % age Probat Confirm Femal Filled Vacant Female Male Male ved filled ion ation e

1 CAO's office 3 2 1 67 1 1 0 2 100 - Administration 2 25 16 9 64 2 14 6 10 Department 38 63

3 Finance 19 17 2 89 0 17 8 9 47 53 Statutory/Cou 4 7 3 4 43 0 3 1 2 ncil 33 67

5 Production 34 9 25 26 0 9 1 8 11 89 Health 6 11 7 4 64 0 7 1 6 department 14 86

7 Education 10 8 2 80 0 8 2 6 25 75 Natural 8 19 13 6 68 3 10 3 10 Resources 23 77 Community 9 8 5 3 63 1 4 2 3 Based Service 40 60 Works and

10 Technical 26 11 15 42 0 11 1 10 9 91 Services 10 11 Planning Unit 7 3 4 43 0 3 0 3 - 0

12 Internal Audit 7 3 4 43 0 3 1 2 33 67 7 Sub-total 176 97 79 55 7 90 26 71 27 3

Station S/n Staffing Information Status Gender Analysis % age Name Appro %ge Probat Confirm Femal Filled Vacant Female Male Male ved filled ion ation e Aliba Sub 10 1 14 8 6 57 1 7 0 8 County - 0 Gimara Sub 2 15 10 5 67 0 10 2 8 County 20 80 Itula sub 10 3 18 15 3 83 0 15 0 15 County - 0 Lefori Sub 4 15 10 5 67 0 10 3 7 County 30 70 Moyo Sub 5 16 11 5 69 0 11 6 5 County 55 45 Metu Sub 10 6 16 12 4 75 0 12 0 12 County - 0 Laropi Sub 7 14 10 4 71 0 10 1 9 County 10 90 Dufile Sub 8 14 10 4 71 1 9 1 9 County 10 90 Moyo Town 9 62 31 31 50 5 26 9 22 Council 29 71 8 Sub-total 184 117 67 64 7 110 22 95 19 1 Dept., Sub 7 County & 360 214 146 59 14 200 48 166 22 8 Tc Total

Station S/n Staffing Information Status Gender Analysis % age Name Appro % age Probat Confirm Femal Filled Vacant Female Male Male ved filled ion ation e

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1 Moyo Hospital 201 157 44 78 3 154 84 73 54 46 Health Centre 2 48 41 7 85 6 35 15 26 IV 37 63

3 HCIIIs (11) 209 178 31 85 17 161 66 112 37 63

4 HC IIs (27) 243 126 117 52 11 115 52 74 41 59 PHC Sub 5 701 502 199 72 37 465 217 285 Total 43 7

Station Staffing Information Status Gender Analysis % age Name Appro Vaca % age Probat Confirm Femal Filled Female Male Male ved nt filled ion ation e Primary 14 748 735 13 98 32 703 263 472 Schools 36 64 Secondary 15 125 88 37 70 32 62 21 67 Schools 24 76

16 PTC 61 32 29 52 4 28 13 19 41 59

17 MTI 62 29 33 47 11 18 6 23 21 79 Education 6 Sub-total 996 884 112 89 32 811 303 581 34 6 Overall 1, 1, 6 District total 2,057 600 457 78 83 1,476 568 032 36 5

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