Office of the Auditor General

OFFICE OF THE AUDITOR GENERAL

THE REPUBLIC OF UGANDA

REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF IBANDA DISTRICT FOR THE YEAR ENDED 30TH JUNE 2017

OFFICE OF THE AUDITOR GENERAL UGANDA

TABLE OF CONTENTS

LIST OF ACRONYMS ...... 2 Key Audit Matters ...... 4  Utilization of Medicines and health Supplies ...... 4

 Inadequate record keeping ...... 5  Stock outs ...... 5  Expired Drugs ...... 6  Understaffing in Ishongororo Health centre ...... 6 Other Matter ...... 7  Understaffing in Ibanda District Administration Offices ...... 7  Lack of land titles ...... 7

Management’s Responsibility for the Financial Statements ...... 8 Auditor’s Responsibilities for the Audit of the Financial Statements ...... 8 APPENDICES ...... 11 APPENDIX I: Prolonged Drug Stock Outs ...... 11 APPENDIX II: Understaffing in I shongororo Health Centres ...... 12 Appendix III Understaffing Ibanda District Administration Offices...... 12 APPENDIX I V: Lack of Land Titles ...... 13

LIST OF ACRONYMS

DLG District Local Government DMO District Medical Officer EMHS Essential Medicines Health Supplies HC Health Centre ICT Information Communication Technology ISSAI International Standards of Supreme Audit Institution LGFAM Local Governments Financial and Accounting Manual 2007 LGFAR Local Governments Financial and Accounting Regulations 2007 MMHS Management of Medicines and Health Supplies Manual MoESTS Ministry of Education Science and Technology and Sports MoFPED Ministry of Finance Planning and Economic Development MRDT Malaria Rapid Test NMS National Medical Stores PFMA Public Finance Management Act 2015 PPDA Public Procurement and Disposal of Assets UDHR Universal Declaration of Human Rights UGX Uganda Shillings URA Uganda Revenue Authority USMID Uganda Support to Municipal Infrastructure Development UWEP Uganda Women Empowerment Program VAT Value Added Tax WHT Withholding Tax YLP Youth Livelihood Program

REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF IBANDA DISTRICT FOR THE YEAR ENDED 30TH JUNE 2017

THE RT. HON. SPEAKER OF PARLIAMENT

Opinion I have audited the financial statements of Ibanda District Local Government which comprise the Statement of Financial Position as at 30th June 2017, 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 Ibanda District Local Government for the year ended 30th June 2017 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), the National Audit Act 2008 and the Audit Methodology of my Office. 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 Ibanda District in accordance with the Constitution of the Republic of Uganda (1995) as amended, the National Audit Act 2008, the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to my audit of the financial statements in Uganda. I have fulfilled my other ethical responsibilities in accordance with these requirements and the IESBA Code. 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 as a whole, and in forming my opinion thereon, and I do not provide a separate opinion on these matters. I have determined the matters described below as key audit matters to be communicated in my report.

 Utilization of Medicines and health Supplies The Management of Medicines and medical Supplies Manual indicate that Medicines and medical supplies form the second biggest expenditure in the health sector after human resources. The security of medicines must be ensured at all levels to prevent theft, abuse, misuse and wastage. Consequently in the course of auditing the District’s financial statements, I considered the utilization of medicines and medical supplies as an area of focus. The audit focused on the procedures, processes, tools and documentation used to manage medicines and medical supplies which included;  Involving external expertise in identifying the sample of tracer medicines and medical supplies, and developing data collection tools.  Selecting medicines and medical supplies to trace their utilization in the hospital.  Analysing the delivery cycles, balances on stock cards and order levels to ascertain stock outs.  Obtaining and checking the records relating to the expired medicines and also inspecting the storage practices.  Establishing the availability of key human resource personnel to ensure that medicines and medical supplies are not wasted as explained in the Management of Medicines and medical Supplies Manual. I obtained the approved structure and compared it with the list of existing staff. I considered a preselected sample involving Ishongororo HCIV and made the following observations at the health facilities;

It also considered the human resources for the health units and in addition it considered a preselected sample of one Health Centre of Ishongororo HCIV. I involved external expertise in conducting the audit and I observed the following shortcomings at the health facilities;

 Inadequate record keeping Proper Accountability for essential medicines and commodities is a fundamental requirement of the National Medicines policy prescribed in Chapter 5 of the MMHS manual. In assessing utilisation of essential medicines and commodities, I obtained and reviewed various documents used in stock management like NMS Delivery invoices, Stock cards, Requisition & Issue Vouchers and Dispensing Logs and also conducted physical verification of available stock. Based on the procedures performed, it was observed that requisition vouchers and dispensing logs were not maintained and consequently it becomes difficult to verify the utilisation of the medicines. According to the Accounting Officer the shortcoming may be a result of mismanagement or poor record keeping. Issues from the stores are now supported by issue/requisition vouchers and all departments have got dispensing log books.

The Accounting Officer should ensure that all the necessary records for the Items are properly maintained and recorded.

 Stock outs Part 3 of the MMHS manual requires that management establishes policies, procedures and techniques to maintain an optimum amount of stock of each item at all Health Facilities to minimize stock outs and expiry. I analysed the delivery cycles and balance on stock cards and observed that 10 items out of the 11 selected indicator EMHS experienced stock outs within the audit period. Noticeably malaria rapid diagnostic tests were out of stock for an average of 37 days and Artemether 18 for 95 days as shown in appendix I.

The stock out may be a result of failure by NMS to supply drugs in the quantities ordered by Health centres and lack of reliable information on drugs usage and stocking positions. The stock outs erode patient confidence in the health sector which leads patients to explore alternatives, inappropriate and expensive systems of health care. The Accounting Officer should liaise with NMS to ensure continuous optimum stock of medicines and supplies.

 Expired Drugs Part 9 – of the MMHS manual requires that Expired items should be properly recorded, placed in designated area and destroyed in accordance with the local regulations. I obtained and checked the records relating to the expired medicines and also inspected how they are stored. However, I observed that medicines worth UGX.11,563,240 had expired and stayed for a period of 10 months to 1 year without destruction. The expiry of the drugs may be a result of excess stocking of slow moving drugs. The Accounting Officer explained that destruction of drugs is done in Nakasongola and the District requested Ministry of Health to transport the drugs. This was not yet done.

The Accounting Officer should liaise with NMS to ensure that expired or damaged stock is destroyed in accordance with the regulations.

 Understaffing in Ishongororo Health centre I obtained the approved structures and compared it with the lists of existing staff. It was observed that for Ishongororo HC IV, out of 48 approved positions, only 35(72.9 %) posts were filled, leaving 13 (27.1%) positions vacant as shown in appendix II. Among the vacant positions, the critical positions relating to medicines management include the Senior medical officer and Dispensers and nursing officers who were missing in health centre. 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.

The Accounting Officer should liaise with the relevant authorities namely the Ministry of Public service and the Ministry of Finance to have the existing vacancies filled as soon as possible.

Other Matter In addition to the matters raised above, I consider it necessary to communicate the following matters other than those presented or disclosed in the financial statements:

 Understaffing in Ibanda District Administration Offices The District has an approved staff structure of 151 positions. Out of the approved staff structure only 42 (28%) is filled leaving a staffing gap of 109 (72%) positions as shown in appendix III. 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.

The Accounting Officer explained that recruitment was done and currently staffing levels reached 61.7% and request has been made to public service to allow recruitment of more staff and this has been approved. The Accounting Officers should continue engaging the Ministry of Public Service, the Ministry of Local Government and the Ministry of Finance Planning and Economic Development to address the challenge.

 Lack of land titles Regulation 58(4) of Local Governments Financial and Accounting Regulations 2007 (LGFARs) requires that in order to comply with the required accounting systems, the properties, and assets of a local government, shall be properly registered, titles issued, and valued and that requirement shall apply to both movable and immovable properties and assets and it shall constitute a fixed asset register. However, I observed that most of the district land did not have land titles as shown in appendix IV. There is a risk that Council land is exposed to encroachment and disputes.

The Accounting Officer explained that the district had embarked on the processing of land titles and five land titles were already in place. The Accounting Officer should ensure that the land titles are secured.

Management’s Responsibility for the Financial Statements Under Article 164 of the Constitution of the Republic of Uganda, 1995 (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 Ibanda District Local Government. 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 the Public Finance Management Act 2015 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. In preparing the financial statements, the Accounting Officer is responsible for assessing the District Local Government’s ability to continue delivering its mandate, disclosing, as applicable, matters related to affecting the delivery of the mandate of the District Local Government, and using the Local Governments Financial and Accounting Manual, 2007 and Public Finance Management Act 2015 unless the Accounting Officer has a realistic alternative to the contrary.

The Accounting Officer is responsible for overseeing the Ibanda District Local Government’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements My objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISSAIs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with ISSAIs, I exercise professional judgment and maintain professional scepticism throughout the audit. I also:

 Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.  Obtain an understanding of internal control relevant to the audit 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 Ibanda District Local Government’s internal control.  Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.  Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the District Local Government’s ability to deliver its mandate. If I conclude that a material uncertainty exists, I am required to draw attention in my auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my auditor’s report. However, future events or conditions may cause the District Local Government’s to fail to deliver its mandate.  Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

I communicate with the Accounting Officer regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit. I also provide the Accounting Officer with a statement that I have complied with relevant ethical requirements regarding independence, and to communicate with him/her all relationships and other matters that may reasonably be thought to bear on my independence, and where applicable, related safeguards.

From the matters communicated with the Accounting Officer, I determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. I describe these matters in my auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, I determine that a matter should not be communicated in my report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

John F.S. Muwanga AUDITOR GENERAL KAMPALA 5th December, 2017 (Seal of the Auditor General)

APPENDICES APPENDIX I: Prolonged Drug Stock Outs Drugs and Stock Out Period commodities Stock out Duration(in days) Starting Ending

(date when the stock (Stock being balance is NIL) replenished) PGA 2_0 0

MRDT 30/6/16 16/11/16 134

18/4/17 24/4/17 6

25/5/17 24/5/17 1

29/5/17 2/6/2017 8

OXYTOCIN 8/7/2016 15/8/16 38

ARTMETHE 1/7/2016 16/11/16 138 R 18 17/12/16 4/4/2017 110

22/5/17 30/6/17 39 ARTMETHE 9/8/2016 16/11/16 99 R 12 17/1/17 4/4/2017 76 ARTMETHE 29/8/16 16/11/16 79 R 6 Safe 30/6/16 15/8/16 46 Delivery Kit (Maama Kit) 15/9/16 27/9/16 12 5/10/2016 8/11/201 34 6 9/11/2016 6/2/2017 88 Surgical 8/7/2016 19/7/201 11 Gloves 7.5 6 21/7/2016 15/8/16 25

15/9/16 27/9/16 12

9/11/2016 16/11/16 7

22/12/16 6/2/2017 15

27/3/17 4/4/2017 8

9/5/2017 2/6/2017 23

Coartem 24 8/8/2016 15/8/16 7

20/9/16 27/9/16 7

Determine 15/11/16 16/11/16 1

16/12/16 5/1/2016 19

17/1/16 24/1/17 8

31/1/17 6/2/2017 6

APPENDIX II: Understaffing in I shongororo Health Centres Category Number approved Positions filled Variance

Senior Medical Officer 1 1 0 Medical Officer 1 0 1 Senior Nursing Officer 1 0 1 Public Health Nurse 1 0 1 Clinical Officer 2 3 1 Ophthalmic Clinical Officer 1 1 0 Health Inspector 2 0 2 Dispenser 1 0 1 Public Health Dental Officer 1 1 0 Laboratory Technician 1 2 0 Assistant Entomological Officer (Medical) 1 1 0 Nursing Officer (Nursing) 1 2 0 Nursing Officer (Midwifery) 1 2 0 Nursing Officer (Psychiatry) 1 1 0 Assistant Health Educator 1 0 1 Anaesthetic Officer 1 0 1 Theatre Assistant 2 0 2 Anaesthetic Assistant 2 1 2 Enrolled Psychiatric Nurse 1 0 1 Enrolled Nurse 3 5 0 Enrolled Midwife 3 6 0 Cold Chain Assistant 1 0 1 Office Typist 1 0 1 Laboratory Assistant 1 1 0 Stores Assistant 1 0 1 Accounts Assistant 1 1 0 Health Assistant 1 1 0 Health Information Assistant 1 1 0 Nursing Assistant 5 0 5 Driver 1 2 0 Askari 3 1 2 Porter 3 2 1 Total 48 35 25 Appendix III Understaffing Ibanda District Administration Offices Department Approved posts Filled posts Vacant posts

Town clerk’s Office 3 1 2 Administration 27 7 20 Finance and Planning 22 8 14 Education 6 0 6 Health 6 1 5 Production and Marketing 5 3 2 Works Department 11 2 9 Community Based Services 7 1 6 Natural Resources 2 0 2 Internal Audit 2 1 1 Trade, industry and local economic Development 3 0 3 3 Municipal Divisions 0 0 0 Senior Assistant Town Clerk 3 1 2 Assistant Town Clerk 3 0 3 Treasurer 3 0 3 Community Development Officer 3 1 2 Town Agents Customised 21 wards 21 12 9 Assistant Treasurer 3 0 3 Law Enforcement Officer 3 1 2 Pool Stenographer 3 0 3 Assistant Law Enforc. Officer(customised)U7 9 3 6 Office attendant 3 0 3 Driver 3 0 3 Total 151 42 109

APPENDIX I V: Lack of Land Titles LOCATION DETAILS LAND SIZE REMARKS Saza Land Kitwe, Kyaruhanga in Approximately 22.93 Ha Not surveyed – ibanda town council or 56.66 acres Application submitted to ULC Plot opposite Petro KyabugaijaBufunda in Approximately 0.2 Ha Not yet registered City ibanda town council KacuziSubcounty Kisabo 11, 0.6Ha Not surveyed Kanywambogo Rwenzigye, Irimya, 0.02Ha Not surveyed Kagyezi, Irimya 1 Ha Not surveyed KitoomaIrimya 0.045 Ha Not surveyed Karusi, Irimya 0.045 HA Not surveyed Buhindagye 0.045 Ha Not surveyed Kicuzi, 1.155 Ha Not surveyed NYAMAREBE Nyamarebe 1, 8.24 Ha Not surveyed, has a SUBCOUNTY Kyengando freehold offer Kako, Kyengando 2.65 Ha Not surveyed Nyakabungo, 0.24 Ha Not surveyed Karama , kanyarugiri 0.12 Ha not surveyed Rwenkuba 11 0.22 Ha Not surveyed Bihanga, Kaceen 1.82 Ha Not Surveyed

Kololo, Ryabiju 0.2 Ha Not Surveyed Bwera 1, Kyengando, 1.07 Ha Not surveyed Bihanga 11, Bihanga, 0.78 Ha Not surveyed Bihanga 11, Bihanga, 2.79 Ha Not surveyed ISHONGORORO Kashozi 1.92 Ha Not surveyed SUBCOUNTY Kashozi ( Road gang) 0.39 Ha Not surveyed Kyankanga, Birongo, ( 0.07 Ha and 0.07 Ha( Not surveyed 2 neighbouring plots) formerly BanyankoleKweterana Plot Kyankanga, Birongo, 0.06 Ha Not surveyed Nsasi SUB-COUNTY Nsasi TC Cell, 5.01 Ha Not surveyed Katembe, Rwobuzizi, 0.44 Ha Not surveyed KinoniCentarl, Kinoni, 1 Ha Not surveyed KIKYENKYE Nyakabungo, Kihani, 2.67 Ha Not surveyed SUBCOUNTY Nyakabungo, Kihani, 0.24 Ha Not surveyed – Application submitted to the land board Kihani 111, Kihani, 1.14 Ha Not surveyed Rwengwe 111, 0.07 Ha Not surveyed Rwengwe Rwengwe 1, Rwengwe, 0.26 Ha and Not surveyed Kikyenkye( Kidandari) - 0.23 Ha 2 plots opposite each pther Rwomuhoro 1, 0.23 Ha Not surveyed Rwengwe Rwomuhoro 11, 1.42 Ha Not surveyed Rwengwe Katongole 1, Katongole, 0.2 Ha and 0.2 Not surveyed Kikyenkye( Road gang) Ha plots separated by kazo road KIJONGO SUBCOUNTY Kanagamukono, 0.42 Ha Not surveyed Rwambu Rwambu Parish 0.04 Ha Not surveyed headquarters Rwambu 1V, Rwambu 0.03 Ha Not surveyed Rwambu 11, Rwambu, 0.05 Ha Not surveyed Kanyinya 0.04 Ha Not surveyed Rwenkuba 0.09 Ha Not surveyed Rwanyabuka 11 0.05 Ha Not surveyed Kayanja 0.4 Ha Not surveyed Endama, Kamwiri 0.06 Ha Not surveyed Kamwiri 1, Kamwiri 0.06 Ha Not surveyed

Rwenkobwa TC, 0.42 Ha Not surveyed Rwenkobwa Birongo, Rwambu, 1.67 Ha Not surveyed Rwenkobwa TC, 0.05 Ha Not surveyed Rwenkobwa, Kijongo( Plot in town) KYEIHANGARA Kabingo 5.52 Ha Not surveyed SUBCOUNTY Keihangara 1V, 3.55 Ha Not surveyed Bihembe, 0,21 Ha Not surveyed Rwenshanbya, Rwenshambya 111, 0.19 Ha Not surveyed rwenshambya, Rugaga V, Rugaga, 0.52 Ha Not surveyed Bisheshe sub county Bisheshe 6.28(1.75 Ha Not surveyed sub county headquarters- Health center 111 Bugarama, 0.9 Ha Not surveyed Karangara, 0.296 Ha Not surveyed Bugarama 0.18 Ha Not surveyed Kabaare 0.17 Ha Not surveyed Kakatsi 0.43 Ha Not surveyed Kakatsi 2.68 Ha Not surveyed Bisheshe 0.129 Ha Not surveyed Mashuri, 0.79 Ha Not surveyed Kanyende, Masuri, 0.79 Ha Not surveyed Kashansha 0.39 Ha Not surveyed NYABUHIKYE Rugoga, Bwahwa 1.66 Ha Not surveyed SUBCOUNTY Nyamirima lower, 0.76 Ha Not surveyed Nyamirima Bwentama, Nyamirima( 0.44 Ha Not surveyed Kabagoma Dip tank Kanyansheko 0.87 Ha Not surveyed Rubaya 0.7 Ha Not surveyed Kayenje, Ruyonza( 0.96 Ha Not surveyed Ruyonza Dip tank Kayenje 0.23 Ha Not surveyed Nyabuhikye TC, 1.48 Ha Not surveyed Kayenje, Kayenje 4.95 Ha Not surveyed Ruhoko, Kayenje, 0 Not surveyed RUKIRI SUBCOUNTY Ntanga, Bwenda, 0.05 Ha Not surveyed Rukiri( Road Gang Ntanga, Bwenda, 1.45 Ha Not surveyed

Rukiri( Road Gang Ntanga, Bwenda 2.28 Ha Not surveyed Kacungiro, Bwenda, 16.20 Ha Not surveyed Rukiri ( PEAS) Ihome, Kihungye, 4.84 Ha Not surveyed Katembe (Kihungye River) Kashari, Katembe, 0.25 Ha Not surveyed Rukiri( road gang) Nyarukiika Parish 2.14 Ha Not surveyed Nyarukiika Parish 0.34 Ha Not surveyed Ryakatiri, Katembe, 0.34 Ha Not surveyed Kabingo, Mabonwa, 1.35 Ha Not surveyed Rwengorogoro, 1.09 Ha Not surveyed Mpasha, Mpasha 0.72 Ha Not surveyed Kasensero, Kigunga, 0 Not surveyed