THE REPUBLIC OF

REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF LAW DEVELOPMENT CENTRE FOR THE YEAR ENDED 30TH JUNE, 2016

OFFICE OF THE AUDITOR GENERAL UGANDA

TABLE OF CONTENTS

LIST OF ACRONYMS ...... 2

REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF LAW DEVELOPMENT CENTRE FOR THE YEAR ENDED 30th JUNE 2016 ...... 3

1.0 INTRODUCTION ...... 7

2.0 BACKGROUND INFORMATION ...... 7

3.0 ENTITY FINANCING ...... 7

4.0 ENTITY OBJECTIVES ...... 8

5.0 AUDIT OBJECTIVES ...... 9

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 ...... 11

8.1 Land Issues ...... 11

8.2 Trade Debtors ...... 12

8.3 Payables ...... 13

8.4 Analysis of activity performance ...... 13

8.5 Unserviceable vehicles not disposed off: ...... 14

1 LIST OF ACRONYMS

Acronym Meaning

EFT Electronic Funds Transfer FY Financial Year GOU Government of Uganda ICT Information Communication Technology JLOS Justice, Law and Order Sector KCC City Council LDC Law Development Centre LPOs Local Purchase Orders MDA Ministries, Departments and Agencies NSSF National Social Security Fund PFMA Public Finance Management Act, 2015 PPDA Public Procurement and Disposal of Public Assets Authority PS/ST Permanent Secretary / Secretary to the Treasury SJ Secretary to the Judiciary TAIs Treasury Accounting Instructions UGX Uganda Shillings URA Uganda Revenue Authority PFMA Public Finance Management Act, 2015

2 REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF LAW DEVELOPMENT CENTRE FOR THE YEAR ENDED 30TH JUNE 2016

THE RT. HON. SPEAKER OF PARLIAMENT

I have audited the Financial Statements of Law Development Centre (LDC) for the year ended 30th June 2016. These financial statements comprise of the Statement of financial position as at 30th June 2016, the statement of comprehensive income, statement of changes in equity and cash flow statement together with other accompanying statements, notes and accounting policies.

Responsibility of the Director The Director is responsible for the preparation and fair presentation of the financial statements, in accordance with the Development Centre Act, Cap 132 of Laws of Uganda 2000, and International Financial Reporting Standards and for such internal controls 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 is to express an opinion on the financial statements based on the 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 as to whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. 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 risks assessments, the Auditor considers the internal controls relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the Centre’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well

3 as evaluating the overall presentation of the financial statements. I believe that the audit evidence obtained is sufficient and appropriate to provide a basis for my audit opinion.

Part “A” of my report sets out my opinion on the financial statements. Part “B” which forms an integral part of this report presents in detail all the significant audit findings made during the audit which were brought to the attention of management.

PART “A” Opinion In my opinion, the financial statements present fairly in all material respects the financial position of Law Development Centre as at 30th June, 2016 and its comprehensive income and cash flows for the year then ended in accordance with the International Financial Reporting Standards (IFRs) and the Law Development Centre Act (Cap 132 of the Laws of Uganda).

Report on other legal requirements As required by the Law Development Centre Act (Cap 132 of the Laws of Uganda) and the National Audit Act, 2008, I report to you, based on my audit, that: i. I have obtained all the information and explanations, which to the best of my knowledge and belief were necessary for the purpose of my audit. ii. In my opinion, proper books of account have been kept by the commission so far, as appears from my examination of those books; and iii. The statement of financial position and statement of Support, Revenue and Expenses are in agreement with the books of account.

4 Emphasis of Matter Without qualifying my opinion, I draw attention to the following matter described in note 8.17 of the financial statements, and also in paragraphs 8.1 my report:

 Land Issues:

Law Development Centre owns a number of plots of land in and around Kampala. However, some of the plots have been encroached on and others encumbered under mortgage. The entity risks losing its land to encroachers if no action is taken.

John F.S. Muwanga AUDITOR GENERAL

KAMPALA

15th December, 2016

5

REPORT OF THE AUDITOR GENERAL AND SUPPLEMENTARY INFORMATION

6 PART "B" DETAILED REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF THE LAW DEVELOPMENT CENTRE FOR THE YEAR ENDED 30TH JUNE 2016

This Section outlines the detailed audit findings, management responses, and my recommendations in respect thereof.

1.0 INTRODUCTION Article 163 (3) of the Constitution of the Republic of Uganda, 1995 (as amended) requires me to audit and report on the public accounts of Uganda and all public offices including the courts, the central and 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 Law development Centre (LDC) to enable me report to Parliament.

2.0 BACKGROUND INFORMATION The Law Development Centre (LDC) is an educational institution for higher learning that offers Post Graduate Diplomas in Legal Practice, Diploma in Law Course and other short law courses. The centre was established by the Law Development Centre Act Cap 132. According to Act, the Law Development Centre is a body corporate with perpetual succession and a common seal and may sue and be sued in its corporate name and, subject to this Act, may do and suffer all other acts and things as bodies corporate may lawfully do and suffer. The commencement of this act was in August 1970.

The Vision of the Centre is “to be the centre for quality legal training and high academic and professional standards” and its mission is “to develop legal capacity in Uganda”. The Centre is located at Plot 339 Kagugube Road, off Muammar Ghadhafi Road, .

3.0 ENTITY FINANCING The Centre was financed by grants from Central Government, funds from Development partners and locally generated revenue mainly from tuition fees. Grants

7 totaling to UGX.6,177,289,000 were received from Central Government, UGX.3,355,665,400 was received from fees from courses and UGX.759,442,200 as other income. The total income from all the sources of revenue was UGX.10,292,396,600 which was 101.4% of the entity’s approved budget estimates for the year of UGX.10,152,325,000.

4.0 ENTITY OBJECTIVES The objectives of the Centre are: a) Organizing and conducting courses of instruction for the Acquisition of legal knowledge, professional skill and experience by persons intending to practice as attorneys in subjects which shall have been determined by the Law Council under the Provisions of any law in force; b) Organizing and conducting courses in legislative drafting; c) Organizing and conducting courses for magistrates and for persons provisionally selected for appointment as magistrates; d) Organizing and conducting training courses for officers of the Government and members of the Uganda Peoples’ Defense Forces with a view to promoting a better understanding of the law; e) Organizing and conducting courses for officers and personnel of courts with a view to improving their efficiency; f) Assisting any Commissioner who may be appointed in the preparation and publication of a revised edition of the Laws of Uganda; g) Assisting in the preparation of reprints of Acts of Parliament in accordance with any law for the time being in force; h) Assisting the Law Reform Commission in the performance of its functions; i) Undertaking research into any branch of the law; j) Holding seminars and conferences on legal matters and problems; k) Collecting, compiling, analyzing and abstracting statistical information on legal and related matters; l) Assisting in the provision of legal aid and advice to indigent litigants and accused persons in accordance with any law for the time being in force; m) Compiling, editing and publishing law reports for Uganda; n) Publishing periodicals, bulletins, digests or other written material concerned with legal and related matters;

8 o) Disseminating and promoting generally a better knowledge of the law; and p) Having such other functions as the Attorney General may, from time to time, specify by statutory instrument.

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. In conducting my reviews, special attention was paid to establish:- a. Whether the financial statements have been prepared in accordance with consistently applied Accounting Policies and fairly present the revenues and expenditures for the period and of the financial position as at the end of the period. b. Whether all Centre 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 Government of Uganda procurement regulations. d. To evaluate and obtain a sufficient understanding of the internal control structure of the organization, assess control risk and identify reportable conditions, including material internal control weaknesses e. Whether the 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 schedules of all revenues collected and reconciled the amounts to the cashbooks and bank statements. (b) Expenditure The payments vouchers were examined for proper authorization, eligibility and budgetary provision, accountability and support documentation.

9 (c) Internal Control System Reviewed the internal control system and its operations to establish whether sound controls were applied throughout the period audited. (d) Procurement Reviewed the procurement of goods and services by the Centre 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 Centre during the period audited. (f) Centre’s 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.

7.0 CATEGORIZATION AND SUMMARY OF FINDINGS 7.1 Categorization of findings The following system of profiling of the audit findings is used to better prioritise the implementation of audit recommendations: No Category Description 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 Has a moderate impact, has a likelihood of reoccurrence, significance 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 Land Issues High 8.2 Trade Debtors - UGX.237,517,900 Moderate

10 8.3 Payables - UGX.59,758,472 Moderate 8.4 Analysis of activity performance Moderate 8.5 Unserviceable vehicles not disposed of: Low

8.0 DETAILED FINDINGS 8.1 Land Issues Law Development Centre owns a number of plots of land in and around Kampala. However, some of these plots have been encroached on and others encumbered under mortgage. In a bid to streamline its land ownership, the Centre contracted an advocate to handle LDC Land matters as per letter dated 11th May, 2016. The Centre tasked the lawyer to:  Open boundaries of all land comprising LDC properties, and land it occupies and land not occupied.  Amalgamate all the 25 land titles into one consolidated land title.

A review of the report dated 12th August and 8th November, 2016 made by the contractor revealed the following:

a. ZONE B - Kibuga Block 9 Plots with no titles- plots 613-615 and 508-509

Land titles for the above plots situated at Kagugube Makerere are missing. The titles were to be replaced through amalgamation.

b. ZONE D - Land occupied by squatters -Plots Nos. 221, 222

Plots Nos. 221, 222 in Zone D Kibuga Block 9 are occupied by squatters and/ or tenants who are willing to be compensated.

c. Plots under mortgage - Plots Nos. 451 and 481

These plots are registered into the names of Azias K. Muwangala and Mary Nambozo Musisi Sebadda. The land is under Mailo tenure system, and currently mortgaged with Post Bank U Ltd and Barclays Bank Ltd respectively. Plot 451 is currently occupied by LDC court and the legality of the mortgage is questionable. Management was advised to open the boundaries to establish the sitting tenant so as to challenge the legality of the mortgage.

11 d. Plots pending replacement of land titles-Plots Nos 245, 247 & 248

The above plots in zone Kibuga block 9 are on one title deed leasehold register in the names of Henry Mubalia Musoke Ltd Seta. It was recommended that the land titles be replaced and LDC to compensate the persons occupying the same.

e. Plots with no matching records -Plots1&39 on , Sabaadu, Kyadondo, Mengo & 164, 154, 464, 510,613, 614 and 615

The above plots have no matching records in the land registry at KCCA. Management was advised to avail copies of duplicate certificates of titles and/or visit the sites.

Under the above circumstances there is a risk of loss of LDC land.

The Accounting Officer explained that copies of duplicate titles have been availed to the advocate for amalgamation. Three titles are to be produced out of the 25 titles.

I wait for the Accounting Officer’s action on the above land matters.

8.2 Trade Debtors - UGX.237,517,900 A verification of the financial statements together with the revenue collection ledgers revealed that total outstanding debtors at close of the financial year amounted to UGX.237,517,900 in respect of unpaid fees (UGX.208,017,900) and other debtors (UGX.29,500,000). The continued holding of these funds by the debtors increases the risk of the debts turning into bad debts.

The Accounting Officer explained that the LDC calendar year ends in December yet the Government accounting period ends in June. They explained that by the close of the Centre academic period, the school fees still outstanding will have been recovered.

I advised the Accounting Officer to ensure that all outstanding receivables are recovered.

12 8.3 Payables - UGX.59,758,472 A verification of the financial statements revealed trade creditors/payables of UGX.59,758,472 that remained unsettled at close of the year and yet surplus of funds remained in the accounts. Some of the unpaid bills relate to URA tax body UGX.6,858,500, UGX.5,615,013 while the balance is in regard to arrears, garages, hotels and telecommunications. Failure to pay liabilities may attract suits and hence penalties that may result into nugatory expenditure to the Law Centre.

The Accounting Officer concurred with the observation and explained that the invoices were received towards the end of the financial Year and settled in the subsequent financial year 2016/2017.

I await the Accounting Officer’s action on the outstanding payables.

8.4 Analysis of activity performance Out of the total revenue received during the financial year of UGX.10,292,396,600, UGX.9,187,158,709 was spent resulting into a performance of 89.3%. A detailed review of the Centre’s performance as per the 2015/16 Performance Report revealed under performance in some activities. The table below refers:

Implementation of LDC activities.

Planned Key Expected Output Actual output Under/over Reason Activity performance Legal Training Train 700 700 students on the 435 students on 265 students not Reduction of number of students on post graduate Bar the post trained over the students who passed the post Course trained graduate Bar anticipated the Law Council pre- graduate Bar Course trained number (37.8% entry examinations. Course under performance) Register 700 700 students in 448 students 252 students not LDC had budgeted to students in Administrative registered. registered. (36%) train 700 students on Administrative Officers Course under the Bar Course, but only Officers registered. performance. 460 students were Course. admitted. DC does not have control over the number of students who are admitted on the Bar Course, it is the Law Council that sets pre- entry examinations that applicants have to pass

13 in order to be eligible to join LDC.

Community Service Handle 1000 1000 walk in clients 765 walk in 235 walk in clients LDC budgeted to handle walk in clients in seven Legal Aid clients in seven not attended 1000 walk-I clients but in seven Clinic Centre of Legal Aid Clinic to.(23.5%) under received only 765 Legal Aid Kampala, Kibaale, Centre of performance clients and they were all Clinic Centre Iganga, Masindi, Kampala, attended to. Lira, Entebbe and Kibaale, Iganga, Kabarole handled. Masindi, Lira, Entebbe and Kabarole handled. Register 1500 1500 cases for 820 cases for 980 cases not LDC does not have cases for reconciliation in reconciliation in registered (65.3%) control over cases that reconciliation various courts of various courts of under are reconciled at in various Iganga, Fort Portal, Iganga, Fort performance. Magistrates Courts. It is courts Kibaale, Masindi, Portal, Kibaale, up to the Magistrate to Lira, Entebbe and Masindi, Lira, decide on the cases to Kabarole Registered Entebbe and hand over to the Kabarole reconciliators. LDC has Registered requested for a meeting with the Chief Registrar to discuss the Reconciliation programme. Procure 100 100 bicycles for fit 80 bicycles for 20 bicycles not Not all funds for bicycles bicycles for fit persons in the new fit persons in the procured (20 %) were released. persons in the districts of Jinja, new districts of under new districts Mukono, Hoima and Jinja, Mukono, performance. of Jinja, Masaka, procured Hoima and Mukono, Masaka, Hoima and procured Masaka.

The Accounting Officer concurred with the observation and explained that the underperformance was due to reduction in number of students who passed the pre entry exam, low turn up of walk in clients and lack of control over cases reconciled at Magistrate Court.

I advised the Accounting Officer to ensure that all planned activities are implemented timely.

8.5 Unserviceable vehicles not disposed off As noted in previous year, the Centre had some unserviceable vehicles that had been recommended for disposal. A review of the 2015-16 Board of survey report dated

14 31st August, 2016 revealed that the said vehicles were not disposed off and are still parked in the Centre’s parking yard. Refer to table below: REG. No MAKE TYPE DATE OF PURCHASE UG 0202J TOYOTA PRADO STATION WAGON 14/11/2004 UAA 143X TOYOTA OMNIBUS - UG 0309J TATA PICK UP 2005

Failure to dispose of the grounded vehicles may result into increased security costs and loss in value of the vehicles due to depreciation.

The Accounting Officer regretted the omission and explained that the delay to dispose of unserviceable vehicles was due to the long time taken by Ministry of Works and Transport to value the vehicles and submit valuation report.

I advised the Accounting Officer to expedite the process of boarding off the vehicles.

15 APPENDIX 1

FINANCIAL STATEMENTS

16