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Office of the Auditor General the Republic of Uganda OFFICE OF THE AUDITOR GENERAL THE REPUBLIC OF UGANDA REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF KABALE DISTRICT LOCAL GOVERNMENT FOR THE YEAR ENDED 30TH JUNE 2018 OFFICE OF THE AUDITOR GENERAL UGANDA TABLE OF CONTENTS LIST OF ACRONYMS ............................................................................................................................ iii Key Audit Matters ................................................................................................................................. 1 1.0 Performance of Youth Livelihood Programme ...................................................................... 2 Emphasis of Matter ............................................................................................................................... 4 2.0 Pension Liabilities ...................................................................................................................... 4 Other Matter .......................................................................................................................................... 4 6.0 Management of rental revenue .............................................................................................. 4 Other Information ................................................................................................................................. 5 Management Responsibilities for the Financial Statements ........................................................... 6 Auditor General’s Responsibilities for the audit of the Financial Statements .............................. 6 Other Reporting Responsibilities ........................................................................................................ 8 REPORT ON THE AUDIT OF COMPLIANCE WITH LEGISLATION .................................................. 8 4.0 Natural Resources ..................................................................................................................... 8 5.0 Capitation Grant ........................................................................................................................ 8 6.0 Status of basic medical equipment ........................................................................................ 9 7.0 Grounded road equipment .................................................................................................... 10 Appendices ............................................................................................................................................ 11 ii LIST OF ACRONYMS F/Y Financial Year GOU Government of Uganda HC Health centre IESBA International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants INTOSAI International Organization of Supreme Audit Institutions ISSA International Standards on Auditing LGA Local Governments Act LGFAR Local Governments Financial and Accounting Regulations MAAIF Ministry of Agriculture, Animal Industries and Fisheries MGLSD Ministry of Gender, Labour and Social Development NAA National Audit Act NEA National Environment Act PFMA Public Finance Management Act, 2015 TAI Treasury Accounting Instructions UGX Uganda Shillings ULA Uganda Land Act URF Uganda Road Fund UWEP Uganda Women Entrepreneurship Programme YIG Youth Interest Group YLP Youth Livelihood Programme iii REPORT OF THE AUDITOR GENERAL ON THE AUDIT OF FINANCIAL STATEMENTS OF KABALE DISTRICT LOCAL GOVERNMENT FOR THE YEAR ENDED 30TH JUNE, 2018 THE RT. HON. SPEAKER OF PARLIAMENT Opinion I have audited the Financial Statements of Kabale District Local Government which comprise the Statement of Financial Position as at 30th June 2018, and the Statement of Financial Performance, Statement of Changes in Equity and Statement of Cash Flows together with other accompanying statements for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In my opinion, the financial statements of Kabale District for the year ended 30th June 2018 are prepared, in all material respects, in accordance with section 51 of the Public Finance Management Act, 2015 and the Local Governments Financial and Accounting Manual, 2007. Basis for Opinion I conducted my audit in accordance with International Standards of Supreme Audit Institutions (ISSAIs). My responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of my report. I am independent of the District in accordance with the Constitution of the Republic of Uganda 1995 (as amended), the National Audit Act, 2008, the International Organization of Supreme Audit Institutions (INTOSAI) Code of Ethics, the International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants (Parts A and B) (IESBA Code), and other independence requirements applicable to performing audits of Financial Statements in Uganda. I have fulfilled my other ethical responsibilities in accordance with the IESBA Code, and in accordance with other ethical requirements applicable to performing audits in Uganda. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion. Key Audit Matters Key audit matters are those matters that, in my professional judgment, were of most significance in my audit of the financial statements of the current period. These matters were addressed in the context of my audit of the financial statements taken as a whole, and 1 in forming my opinion thereon, and I do not provide a separate opinion on these matters; I have determined the matter described below as key audit matter to be communicated in my report: 1.0 Performance of Youth Livelihood Programme The Youth Livelihood Programme (YLP) is a Government Programme being implemented under the Ministry of Gender, Labour and Social Development (MoGLSD) through the Local Government Administrations. The programme, which started in the financial year 2013-2014, was to respond to the existing challenge of unemployment among the Youth. The programme is implemented through the District and support to the vulnerable youth in form of revolving funds for skills development projects and income generating activities. The audit focused on an amount of UGX.317,435,840 disbursed to the District in the Financial Years 2014/2015 whose recovery period of three years had expired by 30th June 2018. The audit procedures performed included ascertaining the following; Whether all funds budgeted for YLP during the period under review were actually released and used only for the program. Whether all funds advanced to the youth groups were repaid in accordance with the agreed repayment schedule and to establish reasons for failure or delays to repay the funds. Whether all funds recovered during the period under review were transferred to the revolving fund account in Bank of Uganda and Whether on a sample basis the funded projects exist and are operating. I made the following observations; 1.1 Funding of the Programme A review of the approved budget for the YLP programme revealed that the District budgeted for a total amount of UGX.317,435,840 for the financial year 2014/2015 and all UGX.317,435,840 (100%) was realised. Consequently, all the projected 60 Youth Interest Groups were funded. 2 1.2 Non-compliance with the repayment schedule It was observed that whereas the groups funded in 2014/2015 were expected to have repaid a total amount of UGX.317,435,840 by close of the financial year 2017/2018, only UGX.111,887,232 (35%) was refunded leaving a balance of UGX.205,548,608 (65%) outstanding as shown in appendix 1. Failure to repay in a timely manner implies that other eligible groups were unable to access the funds since this is a revolving fund. The Accounting Officer explained that the district was split after receiving YLP funds and two districts (Rubanda & Rukiga) created and recovery of funds from the new districts has become hard. He further explained that a letter was written to PS. MoLGSD to allow the district off-set the YLP liability for the two districts to enable them recover YLP funds themselves. I advised the Accounting Officer to follow up the matter to ensure that all outstanding funds are recovered. 1.3 Projects inspection – Youth Livelihood Programme Physical inspection was carried out on two selected projects namely M/s. Mwendo Grain Milling Youth Project and M/s. Kyobugombe Poultry Keeping Youth Project to ascertain whether they were in existence and being implemented in accordance with the operational guidelines. The following observations were made; a. Mwendo grain milling youth project The inspection revealed the following; Basic project records were kept. The Project was functional but the youth were complaining that they were not making profit and considering selling off the grain mill. Interaction with group members revealed that the group was not receiving sufficient technical support and advisory services from the District. Failure to offer technical support to the youth group threatens project continuity. b. Kyobugombe Poultry Keeping Youth Project Physical inspection revealed the following; The group was in existence, Basic project records were kept, 3 The group is in the process of applying for an extension to repay. The group had changed business from the initial approved business of breeding poutry to dealing in Irish potato growing. Interaction with the group members revealed that they were not receiving sufficient technical support
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