THE REPUBLIC OF UGANDA

REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF NATIONAL AGRICULTURAL RESEARCH ORGANISATION FOR THE YEAR ENDED 30TH JUNE, 2015

OFFICE OF THE AUDITOR GENERAL KAMPALA, UGANDA

TABLE OF CONTENTS LIST OF ACRONYMS ...... 2 REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF NATIONAL AGRICULTURAL RESEARCH ORGANISATION (NARO) FOR THE YEAR ENDED 30TH JUNE, 2015 ...... 4 1.0 INTRODUCTION ...... 7 2.0 BACKGROUND INFORMATION ...... 7 3.0 ENTITY FINANCING ...... 8 4.0 OBJECTIVES OF NARO ...... 8 5.0 AUDIT OBJECTIVES ...... 8 6.0 AUDIT PROCEDURES PERFORMED ...... 9 7.0 CATEGORIZATION AND SUMMARY OF FINDINGS ...... 10 7.1 Categorization of findings ...... 10 7.2 Summary of findings ...... 10 8.0 DETAILED FINDINGS ...... 10 8.1 Mischarge of Expenditure ...... 10 8.2 Status of NARO Ownership of Land ...... 11 8.3 Shortfall of Government Release ...... 16 8.4 Un collected NTR in Rent ...... 16 8.5 Poor Maintenance of Structures (Buildings) at the Institutes ...... 17 8.6 Un Operational Soil Micro Biology Laboratory at NARL Kawanda ...... 19 8.7 Status of prior year audit issues ...... 20

LIST OF ACRONYMS

Acronym Meaning NARO National Agricultural Research Organisation FY Financial Year ULC Uganda Land Commission MBAZARDI Mbarara Zonal Agricultural Research Development Institute EAAPP East African Agricultural Productivity Project ZARDI Zonal Agricultural Research Development Institute NARS National Agricultural Research System. UNRA Uganda National Roads Authority ha Hectares IDA International Development Agency GOU Government of Uganda NARL National Agricultural Research Laboratories MOFPED Ministry of Finance, Planning and Economic Development UGX. Uganda Shillings NTR Non Tax Revenue PARIs Public Agricultural Research Institutes Bn Billion NAROSEC National Agricultural Research Organisation Secretariat. UEDCL Uganda Electricity Distribution Company Limited RPS Reserve Protection Services NAFORRI National Forestry Resource Research Institute BOQs Bills of Quantities NaLIRRI National Livestock Resources Research Institute NAFIRRI National Fisheries Resources Research Institute COREC Coffee Research Centre NASARRI National Semi-Arid Resources Research Institute NABUZARDI Nabuin - Zonal Agricultural Research Development Institute NIC National Insurance Corporation ABIZARDI ABI Zonal Agricultural Research Development Institute KAZARDI Kabale Zonal Agricultural Research Development Institute.

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BUZARDI Buginyanya Zonal Agricultural Research Development Institute UETCL Uganda Electricity Transmission Company Ltd Nge ZARDI Ngetta Zonal Agricultural Research Development Institute. ATAAS Agricultural technology and Agribusiness Advisory services. MTEF Medium Term Expenditure Framework. UPDF Uganda People’s Defence Forces MOU Memorandum of Understanding PPDA Public Procurement and Disposal of Public Assets. RT. HON Right Honourable

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REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF NATIONAL AGRICULTURAL RESEARCH ORGANISATION (NARO) FOR THE YEAR ENDED 30TH JUNE, 2015

THE RT. HON. SPEAKER OF PARLIAMENT I have audited the financial statements of National Agricultural Research Organization (NARO) for the year ended 30th June 2015 as set out on pages 8 to 42. These financial statements comprise of 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 (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 the Organization. The Accounting Officer is also responsible for the preparation and fair presentation of these financial statements in accordance with the requirements of the Public Finance Management Act, and the Financial Reporting Guide, 2008, and for such internal control as management determines is 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) and Sections 13 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

4 statements in order to design audit procedures that are appropriate in the circumstances but not for 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 audit opinion.

Part “A” of this report sets out my opinion on the financial statements. Part “B” which forms an integral part of this report represents 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 the National Agricultural Research Organization (NARO) for the year ended 30th June, 2015 were prepared in accordance with Section 51 of the Public Finance Management Act, 2015 and the Financial Reporting Guide, 2008.

Emphasis of Matter Without qualifying my opinion, I draw your attention to the matter described below:

 Mischarge of expenditure-UGX. 66,500,000 Expenditure worth UGX.66,500,000 was spent on various activities but charged on wrong expenditure codes contrary to GOU financial requirements. The practice resulted into misrepresentation of expenditure balances in the financial statements and possible diversion of funds from the intended activities.

Other matters I consider it necessary to communicate the following matters other than those that are presented or disclosed in the financial statements.

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 Land matters It was noted that NARO did not have certificates of titles as evidence of ownership for most of land at the Research Institutions located country wide. There were cases noted where the land has been encroached on.

John F.S. Muwanga AUDITOR GENERAL

KAMPALA

29th October, 2015

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PART “B”

DETAILED REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF NATIONAL AGRICULTURAL RESEARCH ORGANISATION FOR THE FINANCIAL YEAR ENDED 30TH JUNE 2015 This section outlines the detailed audit findings, management responses, and my recommendations in respect thereof.

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 that is to say, 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 NARO to enable me report to Parliament.

2.0 BACKGROUND INFORMATION

NARO is the apex body for guidance and coordination of all agricultural research activities in the National agricultural research system in Uganda. NARO is a Public Institution established by an Act of Parliament, which was enacted on the 21st November 2005. It is a body corporate with perpetual succession and a common seal. NARO comprises of the council as its governing body, committees of the council as its specialized organs, a secretariat for its day-to-day operations with semi-autonomous public agricultural research institutes under its policy guidance.

The Secretariat is located at Plot 3 Lugard Avenue, Entebbe. NARO’s vision is “A farmer responsive research system that generates and disseminates problem- solving, profitable and environmentally sound technologies, knowledge and information on a sustainable basis” and its mission is “The generation, adoption and dissemination of appropriate and demand-driven technologies, knowledge and information through an effective, efficient, sustainable, decentralized and well- coordinated agricultural research system”.

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3.0 ENTITY FINANCING

During the year, NARO was financed by grants from Central Government and locally generated revenues. Funds were also received from IDA for the ATAAS and EAAPP projects, but these were reported on separately. Grants totalling to UGX.40,767,369,724 from Central Government were received, while a total of UGX.2,825,625,856 was received from locally generated revenue. Furthermore; NARO participated in International competitive grants system and received a number of Research grants. The total operating revenue of UGX.40,767,369,724 constituted 87% of its approved budget estimates of UGX.46,805,126,148

4.0 OBJECTIVES OF NARO

The following are the objectives of NARO:-  To enhance the cohesion in the NARS and NARS programmes,  To empower and enhance the capacity of stakeholders in demand articulation and governance of the research programmes  To match competence needs in the public and non-public institutions with the dynamics of the demand for research products and services  To improve access to and ensure effectiveness and efficiency in resource use in the research for development programs.

5.0 AUDIT OBJECTIVES

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. Whether the financial statements have been prepared in accordance with the requirements of the Public Finance Management Act and fairly present the income and expenditures for the year and of the financial position as at the end of the year. b. Whether all Organization funds were utilized with due attention to economy and efficiency and only for the purposes for which the funds were provided. c. Whether goods and services financed have been procured in accordance with the PPDA Act.

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d. To evaluate and obtain a sufficient understanding of the internal control structure of the organisation, assess control risk and identify reportable conditions, including material internal control weaknesses e. Whether management was in compliance with the Government of Uganda financial regulations. f. Whether all necessary supporting documents, records and accounts have been kept in respect of all activities, and are in agreement with the financial statements presented.

6.0 AUDIT PROCEDURES PERFORMED

The following audit procedures were undertaken:-

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

b. Expenditure The Organization’s payments vouchers 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 Organization 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 Organization 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 evaluating the overall financial statement presentation.

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7.0 CATEGORIZATION AND SUMMARY OF FINDINGS 7.1 Categorization of findings The following system of profiling of the audit findings has been adopted to better prioritise 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.

7.2 Summary of findings

No Finding Significance 8.1 Mischarge of Expenditure-UGX.66,500,000 High

8.2 Status of NARO Ownership of Land High 8.2.1 Lack of mark stones for land at Kutuza, Mukono High 8.2.2 Irregular Lease of land at Namulonge (NACCRI) Land to a High Flower Company 8.3 Shortfall of Government Release - UGX. 6,037,756,000 High 8.4 Un collected NTR in Rent UGX 109,600,000 High

8.4.1 Non Payment of Rent Bills by Gulu University High

8.4.2 Non Payment of Rent by a tenant - UGX.9,600,000 High

8.5 Poor Maintenance of Structures (Buildings) at the Institutes Moderate 8.6 Un Operational Soil Micro Biology Laboratory at NARL Kawanda Moderate 8.7 Status of prior year audit issues Low

8.0 DETAILED FINDINGS

8.1 Mischarge of Expenditure-UGX.66,500,000 The Parliament of Uganda appropriates funds in accordance with the needs of the country and this appropriation is implemented through the budget in which funds

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are tagged to particular activities and outputs using account codes and MTEF codes. A review of the Organization’s expenditures revealed that the entity charged wrong expenditure codes to a tune of UGX.66,500,000. The practice is contrary to the intentions of the appropriating authority and leads to incorrect financial reporting.

I explained to management that the practice may result into diversion of funds and misrepresentation of expenditure balances in the financial statements.

Management explained that NARO sought for a research code from the Accountant General which has not been granted and indicated that other mischarges arose from work plan and the budget mismatch.

I advised the Accounting Officer to continue following up the matter with Accountant General to ensure a research code is set up.

8.2 Status of NARO Ownership of Land It was noted that NARO did not have certificate of land titles as evidence of ownership for most of the land located at Research Institutions country wide. The land has either been encroached on or has been taken away illegally with ownership claimed by other people. In my previous audit reports; I indicated the status of land highlighting the extent of encroachment as summarised below; Institute Observation A NAFORRI Untitled Land. 425 hectares of land with no evidence of legal ownership. b Coffee Research 2 acres of land not titled. Center (COREC) - KITUZA C MBAZARDI, Lack of land Titles and land encroachment challenges. It was ABIZARDI noted that there was no proof of land ownership for KAZARDI, BUZARDI Mbazardi, ABIZARDI, KAZARDI, BUZARDI and Kakumiro land. The Mbazadi land has continued to get encroached on. D BUZARDI Land at Kakumiro; This land is held in trust by the Land Commission. It was noted that this land has been encroached on. Other challenges included; Land Commission (ULC) parcelling out pieces of land and allocating it to private developers. E NaFIRRI Land for construction of a pier Institute operates from a pier that belongs to Rift Valley Railways (RVR) but there was no MoU between the two Institutions. Other challenges included Irregular allocation of NAFIRRI Institute land to private developers: f NaLIRRI Irregular use of NaLIRRI’s property (Plot 48 Osukuru Road) 11

G BUGINYANYA Encroachment on the Institute’s land. (BUGIZARDI) Land measuring approximately 270 acres has triplicate title deeds in different individual names and the land was under threat of encroachment. H NASARRI SERERE Land Grabbing by Local community. Some encroachment was reported on the Institute’s land situated at Serere by the local community. In Kumi Town Council; un known persons had started putting up permanent structures. I Nabuin Un-Surveyed land/Lack of a title deed. All the land occupied NABUZARDI by the Institute estimated to be 1,300 acres has never been surveyed and hence no title deed to the same land. J Ngetta Land Nge ZARDI Ngetta Institute has land measuring approx. 540 acres. It was noted that the eastern side of the land that was formerly used for animal rearing has been encroached on.

I further noted that land encroachment has continued to increase hence threatening the existence of Organisation’s land country wide. Below is a summary status of land that has been encroached on and or given out under unclear circumstances.

INSTITUTE LOCATION AREA (Block) AREA AND NATURE OF Registered /ZARDI ENCROACHMENT proprietor NARL Kawanda Block 1: 399 55 ha; Stone quarrying by NARO Kawanda ha private individuals. Block2: 750 450 ha; Establishment of a NARO Kawanda ha market and commercial Botanical centre by war veterans. Gardens- Part of Plot 2 Berkeley Road ULC Entebbe allocated to M/s Shaol Group of Companies Block 260 Plot This land is under conflict 8 Busiro;- with Akright projects limited, Ssenge Kaddu Godfrey & Walusimbi’ family CS no. 211 of 2012 NaCRRI Namulonge There is a threat of over 900 ULC acres leased to Premier Roses NgeZARDI Kitgum 79 ha 20 ha; Land allocated to ULC private developers by Kitgum District Land Board MbaZARDI Mbarara 590 ha 18ha; M/s Ngabo Academy ULC under Captain Bashaija of UPDF., 46.1 hectares leased to Hajuni Investments Ltd BugiZARDI Mayuge 97 ha 97ha; Clan of Mambala of ULC Baise Magumba. MuZARDI Mukono 45.5 ha Lease expired, with UCU Church holdings threatening to evict commission the institute. A court hitherto injunction has been represented by obtained, but safety not UCU Holdings guaranteed. 12

NaFIRRI Jinja ULC Nile Area not All Land allocated by the ULC Crescent determined Uganda Land Commission to private developers. Plot 15B Area not All Land allocated by the ULC Nile determined Uganda Land Commission for Crescent private developers. Acacia Area not All Land allocated by the ULC Close determined Uganda Land Commission to private developers. Plot 76-82 1.208 ha 1.208 ha; land allocated by ULC Magwa the Uganda Land Crescent Commission to private developers. SERERE Soroti 1650 ha 20 ha; Private individuals ULC NaLIRRI Lugara 777 ha 250 ha; Private individuals ULC BuZARDI Kigumba 1735acres 12 acres leased to private ULC individuals by ULC

Besides, NARO does not have an updated register of land that clearly shows the status and type of ownership of land. Details such as the expiry of leases and actual sizes are readily available. I explained to management that there is a possibility that more land could get irregularly taken and or encroached on if appropriate measures are not established to secure the ownership of the land.

The Accounting Officer explained that NARO has compiled an inventory of all land and submitted to Uganda Land Commission to have them titled in the names of NARO. In the interim, the land audit is currently going on with a view of applying for allocation of the land and transfer.

I advised the Accounting Officer to ensure the issues of the titles for the institutes land are followed up immediately to its logical conclusion to avoid more loss.

8.2.1 Lack of mark stones for land at Kutuza, Mukono I noted that NaCORI - Kituza institute has land measuring 195.461 hectares with land title in the names of Uganda Land Commission located in Kyaggwe, block 259, plots 17 and 19. Physical inspection of the land revealed that management did not know exactly where the land boundaries were located as the boundary mark stones could not be seen. The land was not fenced and there were crop gardens and tree planting activities carried out by people neighbouring the institution. The land appeared to have been encroached on. I explained to

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management that failure to understand the boundaries of land that NARO owns is a big weakness that facilitates land grabbing and encroachment.

In response, the accounting officer explained that NARO has planned to open boundaries and survey all its land during the FY 2015/16 in preparation for acquiring the land titles. The land audit exercise will be done first as advised by Solicitor General.

I advised the Accounting Officer to plan urgently and ensure the land boundaries are open to curb down the encroachment and grabbing of the institution’s land.

8.2.2 Irregular Lease of Land at Namulonge (NaCCRI) It was observed that part of NARO land at the National Crops Resources Research Institute (NaCRRI) - Namulonge measuring approximately 357.779 hectares on Volume 4542 (folio 4) plot 651 Kyadondo block 158 Wakiso was leased to Premier Roses Ltd for 99 years by the Commission. A review of correspondences indicated that a lease was signed between ULC (the Lessor) and Premier Roses Ltd (the Lessee) on the 18th June 2015 for a term of 5 years effective 1st June 2015 for a consideration of UGX.440,000,000 which payment had been effected on 16th June 2015. As per the lease term;  During the said term of 5 years, the yearly rent of UGX.22,000,000 is payable by two (2) equal half –yearly payments in advance on the 1st day of January and the 1st day of July in every year.  Rent payable is revisable by the lessor at any time after the expiration of the first 5 years of the said term and at intervals of not less than 10 years thereafter.  Land is for commercial, agriculture, horticulture, floriculture and educational purposes.  Lessee is required to erect buildings on the said land and to complete the said buildings for occupation and use to the satisfaction of the lessor on or before the 31st day of May the year 2029.  When the lessee shall have complied with the building covenant therein and if there shall not at the time be any existing breach or non-observance on the part of the lessee of any of the covenants and conditions in the lease whether expressed or implied, the said term shall be enlarged to 99

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years from the 1st day of June the year 2015 automatically and the lease shall thenceforth be read and construed as if the said term of 99 years had been originally granted thereby. I was not availed with a procurement file on grounds that the file had been taken away by other authorities. In the circumstances I could not therefore obtain adequate information on the matter. A review of scanty information revealed the following anomalies; a) Consultation with NaCRRI Procedure No.5 of the ULC for leasing land states that the Commission after establishing that it is government land will further establish the user department and seek a no objection from that department. However this was not the case. There was no evidence to confirm that a no objection was sought from NARO NaCRRI over the sale of Namulonge Land. It is highly likely that the firm operations could encroach on the existing crops and structures and yet there was no indication of compensation to NARO Institute on the existing developments including crops. b) Lack of MoU There was no MoU between ULC and NARO in reference to this lease before processing of the transaction. I was not availed with the Council minute nor any correspondence between ULC and NARO over the decision to lease this land since NARO had exclusive rights of use. c) Irregular issuance of lease There was no evidence that the status of the previous lease was reviewed before issuing this current lease. Interview with management of NARO showed that the original lease had a balance of 29 years to expire. I explained to management that issuing a land title while there is another title of the same land is irregular and may lead to litigation challenges that could cause financial loss to government. I could not confirm the balance of years remaining as the copy of the original title was not availed for review. d) Valuation of land The consideration of 440m and the annual rent of UGX.22m were not supported with the valuation report. I could not therefore confirm how the consideration was 15

arrived at in view of the size of the land.

e) Revision of offer A review of correspondences on file indicated a proposed lease of 49 years however I noted that the lease offered was revised to 99 years on grounds that the lessee does not breach the terms of the 1st term of 5 years. The basis of leasing out the land for the 99 years could not be established.

In his response; the Accounting Officer explained that a meeting with the Chairperson ULC, Commissioner Land Registration, Director Land and MAAIF was held. The meeting was informed that the title that had been issued to a flower company was made in error and it was recommended for recall and termination.

I await the outcome of the above decision.

8.3 Shortfall of Government Release - UGX. 6,037,756,000 During the year under review, NARO budgeted to receive UGX.46,805,126,000. However, a sum of UGX.40,767,370,000 (87.1%) was released by the Treasury. This left a funding gap of UGX. 6,037,756,000 (12.8%). The non-tax revenue was the least performing item reflecting a shortfall of 60.1%.

In response, management explained that they projected a receipt of compensation of over UGX.2,000,000,000 from Uganda Electricity Transmission Company Ltd (UETCL) for the land occupied by electricity line in Kawanda and the payment was halted due to the land wrangles and awaiting court ruling. Further income worth UGX.1.836bn for compensation of land affected by the road works of Mbarara bypass by UNRA was also not received. It was reported that negotiations for the compensation were still on-going.

I advised the Accounting Officer to strengthen measures in collection of NTR.

8.4 Un collected NTR in Rent UGX 109,600,000 8.4.1 Non Payment of Rent Bills by Gulu University NARO entered into a Memorandum of Understanding (MoU) with Gulu University to utilise NARO Facilities for teaching and instruction of students in various fields including maintaining the premises. Section 4 of the MoU requires the University to pay a consideration of UGX.5,500,000 per month to NARO. I noted that Gulu 16

University owes NARO rent arrears to the tune of UGX.99,000,000. Further, it was noted that the University violated the terms and conditions as set in the MOU by failing to pay rent for 18 months equivalent to UGX.99,000,000. Unless urgent action is taken, there is a possibility that the Institute could lose the stated revenue.

In response, the Accounting Officer explained that management made several and unsuccessful attempts to collect rent from Gulu University and has already communicated the intention to seek legal redress from courts of law.

I await the outcome of the Accounting Officer’s action.

8.4.2 Non Payment of Rent by a tenant - UGX.9,600,000 A tenancy agreement was entered into in April 2003 between NARO and a tenant who occupies premises at Kitgum Station falling under Ngeta ZARDI at a monthly fee of UGX.80,000. I noted that for the last 10 years, the tenant has never paid rent and he continues to occupy the premises resulting into accumulated rent arrears of UGX.9,600,000. I explained to management that failure to collect outstanding rent adversely affect revenue and implementation of some activities by the ZARDI.

In response, The Accounting Officer explained that administrative measures have been taken to collect the rent but the tenant has failed to effect payment. It was indicated that the tenant has been served with the communication of intention to sue.

I await the outcome of the Accounting Officer’s action.

8.5 Poor Maintenance of Structures (Buildings) at the Institutes Inspection of some of the Institutes’ structures of NAFIRRI, NALIRRI, NASARRI and NaCORI–Kituza revealed that some of the institute’s residential houses are not well maintained. The structures require repair especially those of lower grade staff which reflects a bad image on the Organisation. At NARILLI; over 100 houses are roofed with asbestos that was long condemned world-wide as a health hazard to human lives. The pictures below show the current state of the structures

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Houses of lower grade staff at NALIRRI One of the buildings in a poor condition at NAFIRRI

The poorly maintained house at NARILLI

An old and Poorly maintained House in One of the poor houses in NASARRI. NASARRI.

At NaCORI Kituza; Inspection revealed that there were 8 units with four (4) rooms each that were poorly maintained though the outside walls looked strong and not cracked. See the pictures below;

Low cadre housing estate. Reported to be 8 units of 4 rooms each.

I further noted that some houses at Bulegeni Institute in Bulambuli district that were burnt last year in February 2014 by a group of wrong doers were not yet refurbished and there was no indication that plans are underway to work on the houses soon.

Failure to carry out regular maintenance of buildings causes further deterioration

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and could lead to spending more on repairs causing unnecessary expenditure. Besides; there is a possibility that this will continue to affect the performance of the affected staff and the institutes at large. It may also affect the NTR collection that would support the operations of the Institutes. In response, management acknowledged the concern of the deplorable conditions of the dilapidated buildings that are inhabitable and indicated that a government chief valuer has been requested to value the assets including the buildings to advise whether they should be renovated or condemned for demolition. It was further indicated that for some buildings, rehabilitation will start in the third quarter.

I await the outcome of the Accounting Officer’s decision.

8.6 Un Operational Soil Micro Biology Laboratory at NARL Kawanda It was observed that the Soil Micro Biology laboratory that was well equipped with laboratory equipment was not being utilized. Below is the pictorial description of the inside of the laboratory equipment.

Incubator Oven Fume Hood

Refrigerated Centrifuge Water Bath

It was indicated that the research center lacks qualified man power to run the laboratory having advertised the jobs but could not attract qualified persons. In the circumstances, the purpose for which the laboratory was set up may not be achieved.

The Accounting Officer explained that NARL-Kawanda is the central laboratories for NARO and modalities have now been put in place for other affiliated NARO

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institutions to utilize the facilities as long as they have the requisite competence. It was further indicated that NARO was to recruit staff to man the laboratory.

I advised the Accounting Officer to recruit soil micro biology laboratory personnel so as to achieve the intended objectives.

8.7 Status of prior year audit issues During the review, I noted that management had not yet fully implemented the prior year audit recommendations as summarized below; Audit Issue 2013/2014 Recommendation Current Status Mischarge of expenditure- The matter was followed up UGX.206,704,980 with the Accountant General I urged the It was noted that expenditure and a code 224006 ie Accounting Officer to worth Shs.206,704,980 was Agricultural supplies has been continue pursuing charged on wrong expenditure added to the chart of accounts the matter with the codes contrary to GOU chart of to cater for some agricultural Accountant General accounts. inputs. Allocation of a research to have it resolved. code to cover other research

activities and overcome the budgeting anomaly has not been secured yet. Not implemented yet Under funded budget I advised The matter was reported to management to MoFPED and an agricultural Management budgeted to receive pursue the matter of budget was customized and UGX.41,867,739,709 in order to funding with MoFPED prioritized as a ‘Protected Vote’ carry out its activities for the for funds to be released as financial year under review. planned, to enable However, only UGX.35,027,197,017 implementation. NARO received (79.9%) was received leaving a 100% of the 2014/15 budget. UGX.6,840,542,692 un released Being implemented Un-collected NTR - I advised UGX.2,734,758,542 management to The matter is still in court. NARO’s approved NTR budget for follow up the matter year was UGX.5,815,021,500 but I with a view of having Not Resolved yet. noted that UGX.3,080,262,958 was the compensation realised leaving UGX.2,734,758,542 settled. un collected. Underperformed by 47% Un recovered car loan- I urged management Mr. Dickson Baguma has fully Shs.22,910,000 to pursue the paid up his loan. Intention to I noted that NAROSEC terminated affected staff and take legal action against the the services of its two staff after ensure that their former Civil Engineer and Senior the expiry of their employment outstanding loans are Procurement officer has been contracts without recovering the recovered. communicated to them. outstanding loans. Not Implemented yet. Internal Audit Function I advised Recruitment will be concluded management to by end October 2015. Operations of Internal Audit expedite the During the audit, I noted that the recruitment process Not fully Resolved yet. Institutes of ABI –Arua and Mukono with a view of

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ZARDI did not have internal strengthening the auditors. internal audit Inadequate staffing –NARL – I await the outcome Allocation for staff salary to of management’s NARO has remained the same Kawanda commitment. for the last three years making it difficult to recruit additional staff. Not implemented

Audit Inspections I urged management Cases are still in court. to pursue the matter Continued illegal and strengthen Not Resolved yet encroachment on MBAZARDI measures against Land land encroachers. Rwebitaba ZARDI I advised Kabarole local government has Lack of official hand over management to completely vacated the land. An report of properties ensure that a proper MOU between NARO and hand over is done Kabarole Local government and also ensure that detailing how the two the administration institutions will relate is being block is fenced off. prepared. Fencing and Rehabilitation of the buildings has started in the FY 2015/16. Getting implemented Dilapidated properties I advised Rehabilitation of the buildings The institute buildings where the management to plan has started in the financial year staffs are accommodated are and have the 2015/16. roofed with asbestos renovations completed. Implementation on

Security at the station I advised 4 security guards have been It was noted that the security at management to plan recruited and the community the station is inadequate; for adequate security mobilization and sensitization and ensure the on importance of the ZARDI institute land is and need for safe guards fenced off. undertaken. Implemented

MBAZARDI Land encroachment I advised The case is in court and all by a Company management to operations for the company Inspection of MBAZARDI land pursue the matter have been suspended. indicated that other encroachers with relevant have installed an illegal structure authorities and Not fully Resolved yet and a container on the institute ensure that the land government land is recovered from the encroachers. Un compensated land - MBA I advised Management is following up the ZARDI Institute management to issue further with UNRA to have pursue the matter the funds paid. further and have the Not Resolved. compensation resolved. Coffee Research Centre I advised The concerned officer has been (COREC)-Kituza management to asked to give a report detailing Outstanding fuel arrears- verify the claim activities for which the fuel was Shs.24m before settlement is used. 21

made. No evidence of implementation seen. National Forestry Resources I advised Preparation of the BOQs has Research Institute (NAFORRI) management to been completed. Rehabilitation Use of the Guest House ensure that the is scheduled to start in Sept Inspection of the Institute’s Guest repairs are carried 2015. house was carried out as a follow out urgently and the Implementation process on up of the issues raised in the assets put to use. previous audit. I noted that the 10 bed roomed Guest House requires renovation Destruction of property at I advised Investigations are still underway Bulegeni Satellite Station management to after which police report will be quantify the loss in availed. List of destroyed compliance with the property available and reporting regulations for of loss to be done in 2015/2016 subsequent action financial Statements. and reporting. Loss Not Quantified yet.

I advised management to ensure all the recommendations are fully implemented.

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APPENDIX 1

FINANCIAL STATEMENTS

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