OFFICE OF THE AUDITOR GENERAL

THE REPUBLIC OF

REPORT AND OPINION OF THE AUDITOR GENERAL

ON THE FINANCIAL STATEMENTS OF DISTRICT LOCAL GOVERNMENT

FOR THE YEAR ENDED 30TH JUNE 2014

REPORT AND OPINION OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF LOCAL GOVERNMENT FOR THE YEAR ENDED 30TH JUNE 2014

THE RT. HON. SPEAKER OF PARLIAMENT

Introduction

I have audited the accompanying financial statements of Kamwenge District Local Government for the year ended 30th June 2014. These financial Statements comprise of the statement of financial position as at 30th June 2014, statement of financial performance, statement of changes in equity, cash flow statement together with other accompanying statements, notes and accounting policies.

Management Responsibility for the Financial Statements

Under Article 164 of the Constitution of the Republic of Uganda and Section 8 of the Public Finance and Accountability Act, 2003 and section 64 and 86 of the Local Governments’ Act 1997 as amended, the Accounting Officer is accountable to Parliament for the funds and resources of the Local Governments. The Accounting Officer is responsible for the preparation of financial statements, in accordance with regulation 68 of the Local Governments Financial and Accounting Regulation, 2007 and for such internal controls as management determines necessary to enable the preparation of financial statements that are free from material misstatements whether due to fraud or error.

Auditor’s Responsibility

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

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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 the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the Auditor considers internal controls relevant to the entity’s preparation of the financial statements 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. 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 my report sets out my qualified 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.

PART "A"

Basis for Qualified Opinion

Funds not accounted for

A sum of UGX 199,340,100 remained unaccounted for at the time of audit contrary to the regulations. Consequently, I could not confirm that the funds were utilized for the intended purposes.

Qualified Opinion

In my opinion, except for the possible effects of matter described in the Basis for Qualified Opinion paragraph, the financial statements of Kamwenge District as at 30th June 2014 are prepared in all material respects, in accordance with the Local Governments Financial and Accounting Manual, 2007, Section 31(6) of the Public Finance and Accountability Act 2003,

2 the Local Governments Financial and Accounting Regulation, 2007 and the Local Governments’ Act CAP 243 (as amended), of the Laws of Uganda.

John F.S. Muwanga AUDITOR GENERAL

24th Feburary 2015

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PART "B"

KAMWENGE DISTRICT LOCAL GOVERNMENT DETAILED REPORT OF THE AUDITOR GENERAL FOR THE FINANCIAL YEAR ENDED 30TH JUNE 2014

1.0 Introduction

In accordance with Article 163 (3), of the Constitution of the Republic of Uganda 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 Kamwenge District to enable me report to Parliament.

2.0 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. 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 entity’s funds 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 PPDA Act. d. To evaluate and obtain a sufficient understanding of the internal control structure of the entity, assess control risk and identify reportable conditions, including material internal control weaknesses e. To verify whether management of the entity’s funds was in compliance with the Government of Uganda financial regulations.

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f. To verify 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.

3.0 Audit Methodology

The following audit procedures were undertaken:-

a. Revenue

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

b. Expenditure

The entity’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 various department’s during the period under review and reconciled with the approved procurement plan.

e. Fixed Assets Management

Reviewed the use and management of the entity’s assets 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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4.0 Entity Financing

Kamwenge District Local Government is financed by grants (Conditional and Unconditional)from Central Government, Development Partners and locally generated revenues. During the year, the district received UGX 17,322,990,000 from Central Government, UGX 652,294,000 from Development Partners and UGX 437,527,163 from locally generated revenues totaling to UGX 18,412,811,163 which constituted 100% of its approved budget estimates of UGX 18,412,811,163.

5.0 Detailed Audit Findings

This section outlines the detailed audit findings, management responses thereof and my recommendations. 5.1 Funds not Accounted for

5.1.1 Un-vouched Expenditure Section 42 of the Local Governments Financial and Accounting Regulations 2007 requires that all disbursements of public moneys should be made on prescribed payment vouchers as laid in the accounting manual. However, Expenditure amounting to UGX 186,369,150 as shown in Appendix I was not supported by payment vouchers contrary to the regulation.

In the absence of payment vouchers, I was unable to establish the purpose of the payments.

I advised the Accounting Officer to ensure all payment vouchers are obtained and presented for audit verification.

5.1.2 Administrative Advances Regulations 43 (2) of the Local Governments Financial and Accounting Regulations of 2007 require funds advanced for District activities to be properly vouched and accounted for within a month.

It was observed that a sum of UGX 12,970,950 as shown in Appendix II remained unaccounted for at the time of audit contrary to the regulations. Consequently, I could not confirm that funds were utilized for the intended purposes.

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I advised the Accounting Officer to ensure that funds are accounted for or else recovery be made from the responsible officers.

5.2 Under Staffing

The District has an approved staff structure of 150 positions. However, only 88 posts were filled; leaving a staffing gap of 62 posts (representing 42%) of the establishment as shown below. Sector Approved Posts Filled Posts Vacant Posts Administration 32 16 16 Statutory bodies 9 7 2 Finance 15 9 6 Education 10 10 0 Works 16 10 6 CBS 8 5 3 Natural resources 15 7 8 Planning 6 4 2 Internal audit 6 3 3 Production 22 9 13 Health 11 8 3 TOTAL 150 88 62

Under staffing demotivates staff and hampers service delivery.

Management attributed understaffing to the ban on staff recruitment by the Ministry of Public Service. However, clearance had been sought from the Ministry of Public Service for recruitment of some key staff.

I advised the Accounting Officer to liaise with the Ministry of Public Service to expedite the recruitment process.

5.3 Lack of Property Tax Valuation List

Section 4 of the Local Governments Rating Act requires the District to review its valuation list at least once in every 5 years, or such longer period as the Minister may approve.

It was noted that the District did not have a valuation list for property tax.

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There is a risk that the District may not be able to maximise the property tax potential to its expected potential.

The Accounting Officer explained that they are in the process of conducting the valuation exercise.

I advised the Accounting Officer to ensure that the valuation exercise is expedited and the valuation list established.

5.4 Lack of Land Titles

Regulation 58 (4) of the LGFARs of 2007 requires that the properties and assets of a Local Government including land be properly registered and titles issued.

It was observed that the district does not have titles to its various pieces of land as shown in Appendix III. This creates a risk of encroachment and disputes Management attributed the short coming to lack of funds to facilitate the processing of titles.

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

5.5 HEALTH

Para. 2.1.1 (D) of the Local Government Management and Service Delivery (LGMSD) Program Operational Manual 2009, sets out Health Service Delivery Packages or minimum standards for proper functioning of health centers.

An audit inspection of the Health Centres of Kanara HC II and Rukunyu HC IV revealed the following shortcomings; Kanara HC II No. Minimum Standard Remark 1 One maternity ward Small but available 2 Two general wards Not existing 3 Two staff houses: Type 1 ,, 4 One staff house : Type 2 ,, 5 Two staff house : Type 3 Only one 6 Eight two stance pit latrine Only 3 available 7 One medical waste pit Not existing

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8 One placenta Pit ,, 9 One water source No water source 10 Medical Equipment Not there 11 Furniture No furniture

Rukunyu Health Centre IV 1 Running water No water 2 Operating theatre Not operational 3 Mortuary Not there 4 Two doctor house Only one 5 Five staff houses type 1 Only one available 6 Generator house Not there 7 Ten two stance pit latrine Only 4 available 8 One medical waste pit Not there 9 One placenta pit ,, 10 Drug store ,, 11 Means of transport No ambulance 12 Equipment Inadequate

Management admitted the shortcomings and attributed them to inadequate funding. However there are plans to build new structures, renovate and expand on the existing infrastructures and also equip the health center’s.

The Accounting Officer was advised to engage the Ministry of Health to address the inadequacies in the Health Centres.

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APPENDICES Appendix I- Un vouched expenditure DLSP Verification findings Vr. No Payee CHQ AMOUNT DENKA Building Co Ltd 5706 16,077,000 Vouchers were allegedly taken to Tamsak Devt Link Ltd 5715 16,826,000 Ministry of Local Government head Ura 5716 1,074,000 office in Kampala to the accountant Nmc 15,886,000 DLSP. However, there was no Ura 1,005,670 evidence of acknowledgment of the Jonabo Internationla Ltd 16,732,000 same from the Ministry. Ura 1,068,000 Jonabo Internationla Ltd 16,732,000 Ura 1,068,000 Tamsak Devt Link Ltd 22,265,216

Ura 1,421,184 T.T Muh 10,847,520 Nmc 10,129,560 Kamanyire Alfred 5705 2,116,000 Un Known 5759 3,060,000 Sub Total (1) 136,308,150 SDS 13/12 Kanyunyuzi 764,000 No vouchers were availed. Tuhairwe Getrude 5,115 10,110,000 Kanyunyuzi 5,116 14,116,000 Centinary S 5,117 810,000 Okumbuke S 5,118 2,196,000 Okumbuke S 5,119 459,000 Centinary S 5,121 1,575,000 Centinary S 5,122 2,925,000 Kembabazi H 5,123 697,000 Kembabazi H 5,124 2,731,000 Bazalaki V 5,125 697,000 Katuramu A 5,126 7,064,000 Okumbuke S 5,127 1,320,000 Rurangaranga W 5,129 2,202,500 Tuhairwe Getrude 5,131 2,394,500 Sub Total (2) 50,061,000

Appendix II Administrative advances Baylor Account Vr No Date Payee Details of payment Amount 18193 14-10-13 Kyensi monthly DHT meetings Vouchers

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Doreen 888,000 were taken to Katuramu quarterly quality improvement 18195 14-10-13 Abel meetings 1,670,000 Baylor offices. Kahinita 20466 21-10-13 Sam HIV/AIDS committee meetings 780,000 Kembabazi 20458 18-10-13 Harriet quarterly integrated supervision 324,000 Kemigisha 21129 14-10-13 Margret submit accountabilities to f/p 468,000 Tibimpama 21130 14-10-13 Novence monitoring HC IV 202,000 Katuramu conduct monthly data validation 18194 14-10-13 Abel for bio statician 312,000 Kemigisha 21128 14-10-13 Margret photocopying & stationery for 700,000 WORKS 0 Byamukam carrying of water sources data No report, not 17702 16-04-14 a Micheal update 1,058,000 accounted for Administration Piken No receipt 30/8/ 15/8/13 Enterprises Supply of printed stationery 6,058,950 Statutory bodies 3/4/ 11/4/14 Ssozi Chris Allowance and transport 510,000 No receipt Subtotal (3) 12,970,950 GRAND TOTAL 199,340,100

Appendix III

Land without land titles

ITEM Location Size Remarks

Bwizi Sub county Bwizi s/county Approximately 30 acres Not surveyed Headquarters To date

Biguli Livestock Biguli LC I Approximately 3 acres As above

Valley tank Rwebishai LC I As above As above

Livestock market Biguli parish As above As above

Bisozi Market Bisozi TC Approximately 20 acres As above

Mikole Village Kamwenge – Nkomo road Approximately 150 acres As above

Mkoma sub county land Sub county headquarters Approximately 40 acres As above

Mkoma parish land Mkoma Approximately 6 acres As above

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Katalyeba market Katalyeba trading centre As above

Public works land Nkoma parish - As above Rwenchwera

Hospital land Rukunyu village Approximately 40 As above hectares

Bigodi Health unit land Bigodi trading center - As above

Busiriba market land Busiriba - As above

Kahunge sub county land Kahunge trading centre - As above

Kyerima Kyerima LC I Approximately 3 acres As above

Rukunyu market Rukunyu trading centre - As above

Byabasembi Government - 130 acres As above farm

Kagali parish land Kagali cell 2 acres As above

Kagahi Livestock - - As above crash/vaccination center

Kichechi Health unit Kabuyogera - As above

Kicheche sub county land - - As above

Kabujogera market trading centre - As above

Kabujogera parish hall Ruhinga LC I - As above

Ntana sub county land Ntana Hqtrs - As above

Kichwamba market Kichwamba - As above

Rugarama Rugarama - As above

Kabala parish Kabala - As above Headquarters

Ntena parish Hqtrs Ntena trading centre - As above

Sub county land Mahyoro trading centre - As above

Land for fisheries Landing site - As above department

Kamwenge district 7 acres Surveying is

12 headquarters land done

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